The securitisation or Pass Through Certificate (PTC) market volumes registered a sharp decline of around 24% to Rs 348 billion in FY2018 from Rs 430 billion in FY2017. On the other hand, the Direct Assignment (D.A.) transactions saw volumes rise by around 4% to an estimated Rs 490 billion in FY2018 from Rs 470 billion in FY2017. Thus, the aggregate loan sell-down market (PTC and D.A. transactions taken together) registered a decline of around 7% to Rs 838 billion in FY2018 as compared to Rs 900 billion for FY2017.

Typically, the overall loan sell-downs in India are segregated into two types of transactions-rated securitisation or PTC transactions, and unrated D.A. transactions (which constitute bilateral assignment of a pool of loans from one entity to another).

The securitisation market in India has been historically driven by the need for banks to meet their priority sector lending (PSL) targets, as stipulated by RBI. One of the options available to banks for meeting PSL shortfall was to acquire PSL assets through the securitisation route. However, RBI guidelines of April 2016, provided the banks with an alternate avenue in the form of Priority Sector Lending Certificates (PSLCs)-which is also operationally convenient-to meet their PSL targets.

Vibhor Mittal, Head, Structured Finance at ICRA says, ''It was largely on account of higher trading in PSLCs (around Rs. 1,84,000 crore in FY2018 as opposed to only Rs. 50,000 crore in FY2017), that diminished the reliance of banks on the securitisation route to meet the PSL shortfall[1]. In addition to this, securitisation volumes were adversely impacted on account of some uncertainty around applicability of Goods and Services Tax (GST) on the assignment of secured receivables in a securitisation transaction.   Achieving PSL target is the main motive for investors in PTC transactions, while for D.A. transactions the motive is usually loan book growth. Thus, a dip in PTC volumes pursuant to the advent of PSLCs is on expected lines. However, the impact was partially offset by a sharp increase in transactions backed by non-PSL assets. Issuance volumes for non-PSL PTC transactions increased by 72% to Rs. 8,850 crore in FY2018, indicative of around 25% share in overall PTC volumes.'' 

Adds Mittal, ''Vehicle loans continue to have a dominant share of nearly 70% in the PTC market. While mortgage loans are popular in the D.A. market, the share of such loans in the PTC market is low at around 7%. After suffering from demonitisation blues for a brief period, microfinance as an asset class had made a remarkable comeback in the second half of the fiscal, accounting for around 17% of the PTC market. Growing acceptance of PSLCs would continue to exert pressure on securitisation volumes in FY2019 as well. However, the rising share of non-PSL assets in the market is a healthy trend which is expected to strengthen further going forward.''