Mumbai: Tight liquidity conditions forced Microfinance institutions that turned into NBFCs to raise around Rs. 26,200 crores through securitisation in FY19, up 170% compared to Rs. 9,700 crores raised in FY18, according to ratings firm Icra.
“Securitisation has always been an important funding tool for NBFC-MFIs, but the dependence was particularly high during the second half of fiscal 2019” said Vibhor Mittal, Group Head – Structured Finance Ratings at Icra. In FY18 and the first half of FY19, securitisation contributed to only 18 – 20% of the overall disbursements
Investors were also buying retail loan portfolios from MFIs instead of direct on-balance sheet credit exposure, especially for small and medium sized firms, Icra said.
Icra has also seen a sharp increase in the number of NBFC-MFIs taking part in the securitisation market in FY19. 43 entities raised funds through the securitisation route in FY2019 (as opposed to only 24 such entities in FY 2018). Out of this, as many as 14 entities were first time entrants in the securitisation market which is an encouraging development. However, tighter liquidity in the market resulted in increased funding cost. The yields were higher by 100-150 bps for both Priority Sector Lending (PSL) driven and non-PSL transactions in Q3 FY19 over the lows seen in FY18. However, with somRead More – Source