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Business News/ Industry / Banking/  Loan securitisation volumes rose 34% to 9,000 crore in FY17: ICRA
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Loan securitisation volumes rose 34% to ₹9,000 crore in FY17: ICRA

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. Photo: iStockPremium
Microfinance companies raised Rs7,000 crore through sale of asset backed securities compared to Rs9,000 crore in the last fiscal. Photo: iStock

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.

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ABOUT THE AUTHOR
Gopika Gopakumar
Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
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Published: 10 May 2017, 08:04 PM IST
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