NBFCs are back in the game, almost

Mumbai: Non-bank lenders such as Shriram Transport, Indiabulls Housing Finance, the Edelweiss and IIFL Finance groups have begun selling securitised loans in the run-up to the end of a six-month payments standstill — and theoretical resumption of business as usual in last-mile lending.About 30-40 transactions involving the securitised portfolios, or bundles of marketable loans, have been reported in the run-up to the September 30 deadline for the end to the repayment holiday on loans. These transactions amount to hundreds of crores of rupees, an industry estimate showed.Total industry securitised down-selling volumes could swell to a minimum of Rs 15,000 crore in the July-September quarter, which will be more than double in the preceding three months.ICICI Bank, Union Bank, Bank of Baroda, Canara Bank, and LIC of India are among the buyers or potential buyers, market sources told ET. Individual banks and financial institutions could not be contacted immediately for comments.“Our disbursements have significantly gone up on a month-on-month basis prompting us to raise more money,” said Umesh Revankar, managing director at Shriram Transport. “We have done a securitisation deal after a gap of five-six months for a pool of non-priority loans.”Shriram Transport has sold a portfolio of commercial vehicles to LIC of India, in which it may have earned a spread or interest rate differential of as much as 8 per cent. The company has disbursed about Rs 3,000 crore of loans in September versus Rs 1,750 crore a month earlier.“With unlocking gathering pace, we see our disbursements rising in September,” said Gagan Banga, managing director at Indiabulls Housing Finance. “We are in discussions to raise the money needed to fund such credit expansions. Selling a pool of home loans is a part of it, which is now making a comeback (in the industry).”Indiabulls Housing will likely raise about 600 crore through securitisation of assets this month.“NBFC funding requirements have gone up after the moratorium ended,” said Abhishek Dafria of ICRA Ratings. “With the easing of lockdown curbs, those companies began to disburse more credit in September, much higher than in the past five-six months.” Securitisation of assets is, therefore, back in vogue, he said.Deals worth a mere Rs 7,500 crore took place in the first quarter, compared with Rs 50,300 crore in the year-ago period, according to estimates by rating firm ICRA.Sale of asset pools happens in two ways: Direct selling or Direct Assignment (DA) and the issuance of Pass-Through Certificates (PTCs).Both modes are being offered. Financial institutions are looking for assets with no past history of defaults, which is known as Zero Day Past Due (ZDPD) in market parlance.

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