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India’s Market Climbs To New Heights

In the fast-paced world of finance, India’s securitization market has soared to new heights, exceeding Rs 1 lakh crore in H1FY24. Pass-through certificate (PTC) issuances, surpassing Direct Assignment (DA) transactions, now claim over 50% of the market, marking a pivotal shift. Despite this surge, India’s global securitisation market share remains modest, emphasising untapped potential.

CareEdge Rated PTCs showcase a decade of robust performance, contrasting with challenges faced by the US market during the 2008 crisis. India’s market, less prone to complexities, stands resilient, poised for an all-time high in FY24, driven by credit expansion and Priority Sector Lending demand.

Breaking Down the Market’s Transformation

The most noteworthy shift within the market structure is the dominance of Pass-Through Certificates (PTCs) over Direct Assignments (DAs). In H1FY24, PTCs surpassed DAs for the first time in over a decade, accounting for more than 50% of the total market volume. This significant change can be attributed primarily to the merger of HDFC entities.

As of December 6, 2023, the Indian securitization market, particularly in retail assets, has scaled unprecedented heights. Surpassing Rs 1 lakh crore in the first half of FY24, this surge is fueled by heightened credit availability and a robust demand for Priority Sector Lending (PSL)-compliant loans. Pass Through Certificate (PTC) issuances have taken centre stage, constituting over 50% of the market volume and outpacing Direct Assignment (DA) transactions. The growth trajectory is notable, with a staggering 40% increase in securitization volume compared to H1FY23, setting the stage for a projected total volume exceeding Rs 2 lakh crore for FY24.

Read: Comprehensive Analysis of HDFC Bank’s PAT growth

Untapped Potential on a Global Canvas

Despite the remarkable growth on home turf, the Indian securitisation market is a mere speck on the global stage. As of H1FY24, its share in the global securitisation market remains nominal. The Pass-Through Certificate (PTC) market, while showing growth, constitutes a meagre 0.04% of the GDP in CY2022, a stark contrast to the towering 9.61% in the United States. Even in comparison to the retail credit market, PTC issuances represent a minimal 1.69% in CY2022. This underscores the latent potential within the Indian securitization market.

Comparative Performance

Amidst the surge, CareEdge Rated PTCs have stood out with a decade-long display of unwavering resilience. In a notable feat, senior tranches in over 99% of the rated transactions have either maintained their initial credit ratings or, in cases of downgrades, seen their ratings subsequently restored to their original levels or higher.

The US Securitisation Market:

In the financial world, the US remains a dominant player in the securitisation arena. Despite facing challenges during the 2008 subprime mortgage crisis, the US market has not only recovered but also thrived. With a 54% share in the global securitization market as of CY 2022, the US continues to lead the pack. Recent interest rate hikes have caused some ripples, but government policies have thus far cushioned the impact on mortgage loan performance.

Advantage of the Indian Market

The Indian securitisation market, less intricate compared to its US counterpart, boasts simpler structures and fewer tranches. Originators hold a stake in the game through Minimum Risk Retention (MRR), and Loan-to-Value ratios for home loans are generally regulated. Investors exhibit a robust understanding of underlying assets, often holding PTCs until maturity.

Regulatory changes, including MHP and MRR requirements, ensure meticulous credit monitoring. Restrictions on repackaging securities and credit derivatives backed by ABS/MBS prevent transactions from becoming overly complex. India’s regulatory oversight and rigorous borrower assessment further insulate the market from subprime-like lending.

Insights from Industry Experts

Experts, in a webinar by CareEdge Ratings, emphasize the importance of performance and credit quality in India. Vikas Jain, CFO of Hinduja Leyland Finance, cautions against an ‘originate to distribute’ approach without due diligence. He foresees short-term securitization leading but expects co-lending to gain ground once initial hurdles, including tech and API integrations, are addressed. Regulatory changes, such as RBI’s circular on Core Financial Services Solution (CFSS) for NBFCs, are poised to propel co-lending growth.

November 1, 2022: Setting the Stage

Turning the clock back to November 2022, the Indian securitization market showcased robust growth, with a 66% increase in volume during H1FY23. This momentum continued into Q2FY23, recording an overall volume of approximately Rs 39,000 crore, marking a 39% growth over Q2FY22. Direct Assignment (DA) transactions led the charge, accounting for Rs 16,500 crore, while Pass Through Certificate (PTC) transactions made up the remainder.

A Comparative Look

Let’s visualize the comparative data from November 2022 and December 2023:



Total Securitization Volume Rs 39,000 crore Surpassing Rs 1 lakh crore
Growth Rate 66% 40% increase (H1FY24)


As we dissect the trends and numbers from November 2022 to December 2023, the Indian securitization market emerges as a dynamic and evolving force. From record-breaking volumes to resilient performance, the journey is marked by milestones and untapped potential, making it a captivating story in the financial landscape.

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