India's retail asset securitisation market sees 6 pc growth in Q1 FY26

New Delhi, July 9 (IANS) The retail asset securitisation market in India has shown steady growth in the first quarter (Q1) of FY26, with a total transaction volume of Rs 52,000 crore, a new report said on Wednesday.

This includes both pass-through certificate (PTC) issuances and direct assignment (DA) transactions, according to CareEdge Ratings report.

The volume represents a 6 per cent growth over the same period previous year.

Despite this, the market's stability is a positive sign, driven by strong demand for credit, confidence from investors, and the strategic efforts of originators to diversify their funding sources.

One of the most significant milestones in Q1 FY26 was the completion of India's first residential mortgage-backed securitisation (RMBS) deal, carried out by RMBS Development Company Limited (RDCL).

This deal was also the first securitisation transaction to be executed on the Electronic Book Provider (EBP) platform, which marks a new chapter in India’s securitisation market.

This transaction could act as a catalyst for more investors to enter the RMBS sector, potentially boosting innovation and participation in mortgage-backed securities.

The move is expected to create more long-term funding opportunities and allow for better risk transfer.

Looking at the transaction composition in Q1 FY26, there has been a noticeable shift. PTC transactions now make up 56 per cent of the total volume, which marks a significant change from previous periods when direct assignment (DA) transactions were more dominant.

The increase in PTCs likely reflects changing preferences among investors, regulatory factors, and a growing desire for more standardised and tradable financial products.

This shift also suggests that originators are looking to attract a broader investor base.

Among the PTC issuances, asset-backed securitisation (ABS) products were a major contributor, accounting for around 75 per cent of the total volume.

Mortgage-backed securitisation (MBS), on the other hand, remained steady at 10 per cent. A key highlight in Q1 FY26 was the rise in PTC issuances from Microfinance Institutions (MFIs).

MFIs contributed 15 per cent of the total PTC volumes, a significant increase from 8 per cent in Q1 FY25.

This growth reflects greater stability in asset quality within the microfinance sector, and suggests that investor confidence in this space is on the rise.

In the ABS category, vehicle loan financing continued to be a major player, contributing over Rs 14,600 crore, or 51 per cent of total PTC issuances in Q1 FY26.

This includes loans backed by a variety of vehicles such as commercial trucks, passenger cars, two-wheelers, and construction equipment, the report said.

However, the share of vehicle loans has decreased compared to previous quarters, as other asset classes like unsecured personal loans, business loans, and gold loans gained popularity.

Unsecured loans alone accounted for 15 per cent of total PTC issuances -- indicating a growing interest from investors in these alternative retail credit segments.

In the DA segment, mortgage-backed transactions continued to dominate, making up 67 per cent of the total DA volumes in FY25.

Asset-backed DA transactions accounted for 26 per cent, the report stated.

--IANS

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