Live news , top stories, corporate news, company news, sector news, economy news, results analysis news, ceo interviews, fund manager interview, advisor interview, market news, bazaar talk, hot stocks news, ipo news, commodities news, mutual fund news, insurance news, news wire
26 April, 2018 20:43 IST
PSLC Impact-Securitisation issuance volume dips sharply to Rs 348 bn in FY18: ICRA
Source: IRIS | 16 Apr, 2018, 03.48PM
Comments  |  Post Comment

The securitisation or Pass Through Certificate (PTC) market volumes registered a sharp decline of around 24% to Rs 348 billion in FY2018 from Rs 430 billion in FY2017. On the other hand, the Direct Assignment (D.A.) transactions saw volumes rise by around 4% to an estimated Rs 490 billion in FY2018 from Rs 470 billion in FY2017. Thus, the aggregate loan sell-down market (PTC and D.A. transactions taken together) registered a decline of around 7% to Rs 838 billion in FY2018 as compared to Rs 900 billion for FY2017.

Typically, the overall loan sell-downs in India are segregated into two types of transactions-rated securitisation or PTC transactions, and unrated D.A. transactions (which constitute bilateral assignment of a pool of loans from one entity to another).

The securitisation market in India has been historically driven by the need for banks to meet their priority sector lending (PSL) targets, as stipulated by RBI. One of the options available to banks for meeting PSL shortfall was to acquire PSL assets through the securitisation route. However, RBI guidelines of April 2016, provided the banks with an alternate avenue in the form of Priority Sector Lending Certificates (PSLCs)-which is also operationally convenient-to meet their PSL targets.

Vibhor Mittal, Head, Structured Finance at ICRA says, ''It was largely on account of higher trading in PSLCs (around Rs. 1,84,000 crore in FY2018 as opposed to only Rs. 50,000 crore in FY2017), that diminished the reliance of banks on the securitisation route to meet the PSL shortfall[1]. In addition to this, securitisation volumes were adversely impacted on account of some uncertainty around applicability of Goods and Services Tax (GST) on the assignment of secured receivables in a securitisation transaction.   Achieving PSL target is the main motive for investors in PTC transactions, while for D.A. transactions the motive is usually loan book growth. Thus, a dip in PTC volumes pursuant to the advent of PSLCs is on expected lines. However, the impact was partially offset by a sharp increase in transactions backed by non-PSL assets. Issuance volumes for non-PSL PTC transactions increased by 72% to Rs. 8,850 crore in FY2018, indicative of around 25% share in overall PTC volumes.'' 

Adds Mittal, ''Vehicle loans continue to have a dominant share of nearly 70% in the PTC market. While mortgage loans are popular in the D.A. market, the share of such loans in the PTC market is low at around 7%. After suffering from demonitisation blues for a brief period, microfinance as an asset class had made a remarkable comeback in the second half of the fiscal, accounting for around 17% of the PTC market. Growing acceptance of PSLCs would continue to exert pressure on securitisation volumes in FY2019 as well. However, the rising share of non-PSL assets in the market is a healthy trend which is expected to strengthen further going forward.''

Comments Post comment 
 Post Comment
Name Email
Security Code type    into this box
Related Articles
Thermax wins Rs 2.79 bn order for captive cogeneration plant - 26-Apr-2018 16:52
For non-banks, wholesale credit to outpace retail by 400 bps: CRISIL - 26-Apr-2018 16:49
Devang Shah on how to trade in Kotak Bank, Escort and SBI - 26-Apr-2018 16:43
Sensex ends 212 points higher; Nifty settles at 10,617 - 26-Apr-2018 16:01
Implementation of sugar exports dependent on Govt support: ICRA - 26-Apr-2018 15:30
Yes Bank Q4 net jumps 29% to Rs 11.79 bn - 26-Apr-2018 15:25
Supreme Industries quarterly net up 32% - 26-Apr-2018 13:48
Infratel-Indus merger reflects India telco cash pressure: Fitch - 26-Apr-2018 13:44
Indiabulls Real Estate gains after strong Q4 results - 26-Apr-2018 13:02
Indiabulls Real Estate quarterly profit zooms 23.69 times - 26-Apr-2018 12:49
Parag Milk Foods expands product offering under 'Avvatar' brand - 26-Apr-2018 10:18
Home  |   Shares  |   F&O  |   Mutual Funds  |   Loans  |   Insurance  |   News Centre
Wealth Tracker  |   Newsletters  |   Tax Corner  |   NRI Centre  |   Advertise
© All rights reserved. IRIS Business Services Limited
A Disclaimer