Loans to NBFCs help bank credit

Securitisation transactions in India soared to the highest level in eight years, reaching Rs 70,000 crore in fiscal 2016, marking a 60 per cent jump over fiscal 2015. Fiscal 2008 had seen the highest securitisation volume of Rs 71,400 crore.

Securitisation involves raising loans by NBFCs or similar entities by offering their loan book as collateral. Direct assignments (direct sale of loans by originators, who are mostly NBFCs to banks) continued their good run from last fiscal. According to rating agency Crisil, the declining quality of corporate credit persuaded public sector banks to focus more on growing their retail book. Due to this, transaction volume in non-priority sector assets also surged to an estimated 25 per cent of total securitised assets.

Transaction volume in DAs surged 70 per cent to Rs 44,700 crore in fiscal 2016 compared with Rs 26,000 crore in fiscal 2015. Nearly a fifth of retail credit growth could be attributed to direct assignments.