NBFCs, Housing Financiers Sell Loans Worth Rs 1 Lakh Crore In First Half Of FY20, Says Crisil

Non-bank lenders and housing financiers sold more loans in the first half of the current fiscal than in the previous year, reflecting the liquidity crisis among the nation's non-bank lenders.

Loan securitisation by NBFCs and housing financiers in the first half of 2019-20 stood at Rs 1 lakh crore, according to a report by Crisil Ratings. The volume of loan sell-downs by non-bank lenders and housing financiers to banks has grown 48 percent over last year, as both established and new NBFCs and mortgage lenders are significantly selling their loan assets to banks to raise funds, the rating agency said.

“Heading into the second half of the fiscal, the prospects of the market remain strong. Expansion of the originator base and mainstreaming of non-conventional asset classes augur well for the market,” Rohit Inamdar, senior director, Crisil Ratings, said. “A bigger boost, however, is expected from regulatory interventions.”

There are nearly 100 loan originators active in both the mortgage-backed securitisation and asset-backed securitisation market, compared with 70 in the previous year, it said.

While mortgage-backed securitisation volumes rose 16 percent year-on-year to Rs 40,000 crore, that of asset-backed transactions increased 69 percent to Rs 60,000 crore in the first of the current fiscal, according to Crisil.

The rating agency said volumes of mortgage-backed securitisation rose on the back of new originators selling their loan assets as some housing financiers that were large originators in the previous fiscal sold limited volume of loans in the second quarter of the current fiscal due to muted or negative growth in assets under management.

Asset-backed transactions, on the other hand, grew due to an expansion of originators as well loan-asset classes such as loans two-wheelers and vehicles, personal loans and lease rental receivables.

With the Reserve Bank of India recently increasing the household income limit for borrowers of NBFCs or microfinance institutions, loan securitisation transactions for micro-finance loans should get a fillip over the medium term, the rating agency said.

With the RBI relaxing guidelines on minimum holding period for securitisation transactions backed by long-term loans till Dec. 31, 2019, the supply of eligible assets available for mortgage-backed securitisation will increase going forward, it said.