172@29@17@137!~!172@29@0@53!~!|news|business|securitisation-volumes-estimated-to-dip-to-rs-1-2-1-3-lakh-crore-in-fy21-icra-5645351.html!~!news|moneycontrol|com!~!|controller|infinite_scroll_article.php!~!is_mobile=false
Moneycontrol
Subscribe to PRO at just Rs.33 per month. Use code SUPERPRO
you are here: HomeNewsBusiness
Last Updated : Aug 04, 2020 08:05 PM IST | Source: PTI

Securitisation volumes estimated to dip to Rs 1.2-1.3 lakh crore in FY21: ICRA

Volumes in the first quarter of 2020-21 dropped to around Rs 7,500 crore from close to Rs 50,300 crore in the same quarter of the previous year, rating agency ICRA said in a report.

PTI

The securitisation volumes are estimated to significantly drop to Rs 1.2-1.3 lakh crore during the current fiscal due to the impact of COVID-19 and lower availability of eligible loan pools for securitisation, says a report.

The securitisation volumes in 2019-20 were around Rs 1.97 lakh crore.

Volumes in the first quarter of 2020-21 dropped to around Rs 7,500 crore from close to Rs 50,300 crore in the same quarter of the previous year, rating agency ICRA said in a report.

Close

“We estimate that the annual securitisation volumes should remain significantly lower in FY21 than the preceding fiscal at about Rs 1.2-1.3 lakh crore given the impact of the pandemic and the lower availability of eligible pools for securitisation,” ICRA's vice president and head (structured finance ratings) Abhishek Dafria said in a report.

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

The rating agency said the drop in securitisation volumes in the first quarter was primarily attributable to the disruptions caused by the COVID-19 pandemic. The nationwide lockdown severely impacted the income generation capability of a large number of borrowers.

“This made the investors wary of investing in fresh securitisation transactions given the possible deterioration in the loan repaying capability of retail borrowers,” it said.

The RBI's loan moratorium policy, though provided relief to retail borrowers, was detrimental to the securitisation market as investors stayed away from pools with irregular cash flows in the initial months, it said.

The funding requirements for NBFCs and housing finance companies (HFCs) also declined during this quarter due to lower demand from the borrowers and the increased focus on collections rather than disbursements, the agency said.

According to Dafria, though the securitisation volumes were significantly lower during Q1 FY21, the market saw an uptick in volumes in June 2020.    More than two-thirds of the total volumes in Q1 FY21 were completed in June 2020, he said.

“We expect the overall volumes to see further increase in the coming quarters supported by the improvement in collections being seen across asset classes that would restore investor confidence,” Dafria said.

The traction will also be supported by NBFCs who have already recommenced disbursements, albeit lower amounts at present, and would utilize securitisation of their pooled assets as a funding tool, he added.

The extension of the partial guarantee scheme of the government up to March 2021 would also provide some support to increase securitisation volumes, he said.

Commercial vehicle loans emerged as the leading asset class accounting for around 31 percent of overall volumes in the first quarter of this fiscal.

Mortgages, which accounted for around 48 percent overall volumes in Q1 FY19, witnessed a reduction in share to 26 percent in Q1 FY21, due to exit of a few large-size originators in recent years from the securitisation market, the report said.

Share of gold loan segment increased to 32 percent of the total volumes in Q1 FY21 as against 13 percent in the same quarter of the previous fiscal, it said.
First Published on Aug 4, 2020 07:55 pm
Sections