Securitisation counter buzzing in first quarter itself

KOLKATA: For the first time ever, the Indian securitisation market, including direct assignment of loans, have been buzzing with action in the first quarter itself, thanks to a change in the priority sector rule.

IFMR Capital has arranged three deals worth Rs 872 crore while Bharat Financial Inclusion sold Rs 220 crore of priority sector loans to a large private sector bank, people in the know told ET.

Ratings companies which track this market estimated that the first quarter volume of securitisation could have reached around Rs 6,000 crore, without even taking the bilateral deals into consideration.

Earlier, such deals used to flood the market in the fourth quarter with banks rushing to fulfill their priority lending targets. RBI has said that the targets need to be adhered to on a quarterly basis, pushing issuers and investors to take the plunge.

“Securitisation rates are normally 100-150 basis points lower than term loans and deals struck in the first quarter would help us get low cost funds for the entire year,” said Dilli Raj, president at Bharat Financial Inclusion. Raj said the micro lender plans to create a pool of Rs 3,500-crore of priority sector loans this fiscal, 25% more than last fiscal’s Rs 2,800 crore.

IFMR Capital, which arranges and invests in such deals, expects the new priority sector lending rule to spur growth in securitisation deals over bilateral assignment. “We believe that investor appetite and confidence, favourable market and regulatory landscape along with originator requirements will provide continued momentum to the structured finance market,” said Kshama Fernandes, chief executive officer, IFMR Capital.