Key Points
- Key structural drivers include regulatory PSL support and asset quality
- RMBS segment presents significant untapped potential
- TIUP structures dominate with 82% of total market volumes
New Delhi, May 29. India’s securitisation market remained resilient in FY26 despite a modest slowdown in retail transactions, a report said on Friday, pointing to strong credit performance and regulatory tailwinds.
The report from CareEdge Ratings said retail securitisation volumes moderated by approximately 6 per cent in FY26 to Rs 2.53 lakh crore, but maintained a constructive outlook on the sector as the underlying macroeconomic environment remains supportive.
The report noted key structural drivers as ongoing regulatory support through Priority Sector Lending (PSL) guidelines, improved scalability for originators, the ability to selectively securitise high-quality assets, and the historically resilient performance of securitised pools.
The Residential Mortgage-Backed Security (RMBS) segment, in particular, continues to present significant untapped potential.
Structural drivers sustain securitisation market growth
The broader market grew 1 per cent when wholesale loan pass‑through certificates (PTCs) were included.
It noted that the market continues to be dominated by Timely Interest and Ultimate Principal (TIUP) structures, accounting for nearly 82 per cent of total volumes. Vehicle loan pools retained their leadership in Pass-Through Certificate (PTC) issuances, whereas mortgage-backed pools led direct assignment activity.
Further, PTC volumes backed by MFI loans witnessed an increase, reflecting evolving investor preferences amid sectoral uncertainties.
RMBS segment holds untapped potential
“The performance of retail PTCs has remained broadly stable over the long term, with low levels of credit loss observed since 2010," said Mehul Pandya, MD and Group CEO, CareEdge.
Meanwhile, the broader market witnessed downgrades, largely concentrated in microfinance and unsecured business loan pools, Pandya noted.
While near-term headwinds remain, the sector is expected to evolve positively, supported by structural strengths and scope for broader market participation, the ratings agency said.
The report added that the growth of the overall market will depend on deeper participation from large originators, stronger institutional investor engagement, and the development of a more active secondary market.
Declining PSL premiums, stress in unsecured lending, and broader external uncertainties have moderated appetite in some segments, but improved disclosure, standardised reporting, and wider market participation could support the next phase of expansion.
–IANS
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