Loan portfolio for securitisation likely to rise
The Reserve Bank of India’s decision to relax securitization guidelines is likely to release Rs 60,000 crore of loan portfolio available for securitization, industry estimate shows.
The central bank has reduced the holding period from 12 months to six months for loans having original maturity of five years and more, a move that is likely to benefit housing finance companies (HFCs) and non-banking finance companies (NBFCs) engaged in loan against property and home loans where the loan tenor is more than five years.
“Just because of RBI’s relaxation, around Rs 60,000 crore portfolio would be extra window for additional securitization,” said Karthik Srinivasan, senior vice-president at rating firm Icra. “HFCs will continue to sell retail home loan portfolios.”
Following the crisis over a series of defaults by infrastructure lending and development firm IL&FS, liquidity in the system had tightened, leading to RBI easing the securitisation norms.
The move will increase the eligible assets for most HFCs, more so for those who have witnessed strong growth in the past 12 months.
These entities can now raise more funds through the securitisation route, which will provide them with additional liquidity.
DHFL can securitise an additional Rs 6,000 crore of loans over the next three months, while Indiabulls Housing Finance can securitise Rs 25,000 crore between December and May. “This will only look to faster securitization of pools and for small players it can be an impetus,” said Sanjaya Gupta, MD at PNB Housing Finance, which is looking to securitise Rs 4,000 crore portfolio in the second half of the financial year.
Sanjay Chamria, vice chairman of Magma Fincorp, said the move will lend stability to the debt market “which is the need of the hour”. “It will lend more confidence to the banking system and encourage banks to buy more portfolios and build their own retail book, something they have struggled to build,” he said.
NBFCs have been selling in October and November.
A&M partner Bhavik Hathi said, “NBFCs are selling down their books and they will find it easier to sell and this will mostly help the higher rated HFCs.”