Non-banking Finance Companies (NBFCs) and Housing Finance Companies (HFCs) raised Rs 2.36 lakh crore between October 2018 and September 2019 through the sale of loans, ICRA said in a report.
NBFCs and HFCs sold loan assets via the securitisation and direct assignment route, as traditional channels of funding-bank loans and bond issuances-dried up after IL&FS defaults in September last year.
“NBFCs and HFCs continue to rely heavily on the securitisation as a tool for raising funds, manage liquidity and to correct any asset-liability management mismatch,” said Abhishek Dafria, Vice President and Head – Structured Finance Ratings, ICRA.
Commercial vehicle loans were the most sought after in the securitisation market, while the sale of gold loans increased sharply in the direct assignment segment. However, the share of mortgage loans in overall volumes reduced, the report said.
For the current financial year, the sale of loans through securitisation is likely to be above Rs 2 lakh crore, fuelled by the government’s partial credit guarantee scheme and targets laid out for public sector banks to disburse funds under the facility.
Earlier this year, the government announced the partial guarantee scheme in order to increase the flow of liquidity to the NBFC sector. Under this facility, the Department of Economic Affairs will provide a one-time government guarantee of up to 10 percent of the fair value of assets purchased by a bank from a stressed NBFC or HFC.
The scheme was capped at Rs 1 lakh crore and would be open for six months.
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