In the Indian market, the volume of retail securitisation became more than twice to INR 1.9 trillion in the financial year 2019. It is in comparison to INR 85,000 crore for the entire financial year 2018 that is operated by the mortgage lenders. This has been showed by a CRISIL study.
Securitisation is actually referred to the packaging of the loans like auto, home as well as the credit cards of the banks along with the lenders into the debt instruments. It will aid all lenders for selling part of the loans in order to produce flexibility for managing businesses.
It has been said by the rating agency that there have been 3 driving force behind this rush in volume. Firstly some large mortgage operators made their return in the market during the initial quarter of the financial year 2019 after proper explanation that the securitised assets are never accountable to GST.
Secondly the non-banks charged to securitise the receivables in the form of conventional sources of the resource mobilisation fell under pressure after the month of September in the year 2018. This system just went through a flexibility crisis in the 3rd quarter of the financial year 2o19 after IL and FS group organizations failed on payments for the trading papers as well as bonds.
Thirdly, the RBI’s declaration that relaxed the guidelines related to minimum holding period need during securitisation transactions financed by long period loans expanded qualified securitisable assets’ reachability.
Moving towards the financial year 2020 few tailwinds that have helped the market in the financial year 2019 are diminishing. Amidst other aspects repressed supply that followed implementation of GST has been worn out. Administrative modification on the minimum holding duration is available till the month of May 2019. Further the financing environment for the non-banks is slowly becoming stabilised. Latest supportive aspects are appearing in their site.