Chennai: The liquidity concerns in the market are increasingly driving NBFC-MFIs into securitisation. NBFC-MFIs raised Rs 14,000 crore through securitisation in the first half of the fiscal, which was double the amount raised in first half of last year.
As per data collated by credit rater Icra, NBFC-MFIs (non-banking finance company: micro-finance institution) tapped the securitization market to raise around Rs 14,000 crore in H1 FY20, nearly two times the amount raised in H1 FY19. Securitisation values for NBFC-MFIs are expected to cross Rs 30,000 crore in the current fiscal compared with Rs 26,000 crore in FY19.
Funds raised through securitisation accounted for about 40 per cent of the total disbursements made by the NBFC-MFIs in H1FY20 as against 18 per cent in H1FY19. As on September 30, 2019, securitisation volumes contributed to about 75 per cent of the off-balance sheet portfolio of the NBFC-MFI industry whereas the remaining 25 per cent shared was contributed by the Business Correspondent model.
The rise in securitisation is being driven by the inadequate funding available to NBFC-MFIs from conventional sources, finds Icra.
"Asset quality of NBFC-MFIs remains vulnerable to natural calamities and political & communal risks. The impact of recent cyclone and floods in several affected parts of the country and political/communal risk in certain geographies remains a key monitorable," said Abhish-ek Dafria, Vice President and Head-Structured Finance Ratings at Icra.
However, he finds that systemic risk is limited. "The rated securitised pools are usually well diversified and carry high credit enhancement to take care of temporary dips in collections; hence the systemic risks should be limited," he said.