Mumbai: Loan securitisation volumes rose 34% to touch a record Rs9,000 crore in FY17, ratings agency ICRA Ltd said.

Securitization refers to pooling of loan assets by the originators and converting them into marketable securities. Banks buy such securities to meet their priority sector lending requirements.

Loan pools can be securitized in two ways—direct assignment or through issuing pass-through certificates (PTC). Direct assignment involves directly transferring a bunch of loans to the buyer. In a PTC, the certificates are issued through a special purpose vehicle (SPV) and could carry an implicit guarantee by the SPV.

Volume of PTC transactions jumped 72% year on year to Rs43,000 crore and bilateral assignments rose 12% to Rs47,000 crore during 2016-17. Within PTC transactions, vehicle loans contributed to 62% of the volume while housing loans and loan against property made up for 13%.

The volume of micro loan securitisation saw a sharp reduction due to the impact of demonetisation. Microfinance companies raised Rs7,000 crore through sale of asset backed securities compared to Rs9,000 crore in the last fiscal.