India's securitisation market hits record ₹60,000 crore in Q1FY27 as NBFCs drive 22% growth: Crisil

India's securitisation market recorded its strongest-ever first quarter (Q1) in FY27, with issuances rising 22% year-on-year to a record ₹60,000 crore during the April-June period, driven overwhelmingly by non-banking financial companies (NBFCs), according to a report by Crisil Ratings.

The report noted that more than 98% of the total securitisation volume originated from NBFCs, marking a departure from previous peak periods when banks had also made significant contributions to the market.

A notable trend during the quarter was the emergence of gold loans as the largest securitised asset class, overtaking vehicle loans for the first time. Gold loans accounted for 31% of total securitisation volumes, while the share of vehicle loans declined to 26%, primarily due to lower issuances by a large originator.

"The robust volume indicates NBFCs ramped up recourse to securitisation for raising funds amid sustained credit demand and healthy investor appetite for securitised assets. Specifically, gold loan financiers saw strong portfolio growth and used the direct assignment (DA) route to source funds. For investors—largely public sector banks—the big draw was negligible historical credit losses in gold loans and risk-weight benefits," said Deepanshu Singla, Director, Crisil Ratings.

The changing asset mix also weighed on retail mortgage-backed securitisation (MBS), whose share declined 900 basis points year-on-year to 12%, partly due to subdued activity by a large private bank that had contributed significantly in the previous fiscal.

Meanwhile, the share of business loan securitisation increased 300 basis points to 10%, driven largely by secured business loan pools, reflecting growing investor preference for collateral-backed exposures.

Improved performance of microfinance loans, coupled with demand for priority-sector assets, also boosted their share of total securitisation volumes by 300 basis points to 14% during the quarter.

The evolving asset composition influenced the choice of securitisation structure as well. The direct assignment (DA) route accounted for 54% of total issuances, led by gold loans and secured business loans, which are predominantly securitised through this mechanism. Around 87% of the gold loan securitisation volume during the quarter was executed via the DA route.

As a result, the share of pass-through certificate (PTC) transactions moderated to 46%, down from 58% in the corresponding quarter of the previous fiscal.

Banks—including public sector, private, and foreign lenders—continued to dominate the investor base, accounting for investments in around 90% of the securitisation issuances during the quarter. Foreign banks and large NBFCs remained active investors in PTC transactions across asset classes, attracted by favourable risk-adjusted returns. Other participants included alternative investment funds (AIFs), mutual funds, insurance companies, high-net-worth individuals, and family offices.

Looking ahead, Crisil expects the securitisation market to maintain its growth momentum, supported by steady retail credit demand and a widening pool of issuers. "We foresee the securitisation market maintaining its growth trajectory over the coming quarters, supported by healthy retail credit growth and increasing participation from originators across asset classes. The number of unique originators accessing the securitisation market rose to 115 in the first quarter of FY27, compared with 90 a year earlier. With deposit growth continuing to lag credit growth, banks—particularly those with higher credit-deposit ratios—are likely to increasingly evaluate securitisation as a strategic funding tool," said Payal Anand, Associate Director, Crisil Ratings.