Non-Banking Financial Companies (NBFCs) have raised Rs 26,200 crore via securitisation in FY 2019, a growth of more than two and a half times raised in FY18. The figure reported in FY 18 was Rs 9,700 crore.
This growth is credited to the relaxation of norms by the Reserve Bank of India (RBI) which helped them in reducing their dependence on banks and other finance companies.
From an average 18-20 percent of overall disbursements, securitisation helped in funding 37 percent of loans disbursed in Quarter three and might increase to 50 percent by Quarter four in FY 2019, according to ICRA Limited.
ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was launched in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional Investment Information and Credit Rating Agency.
In October-November 2018, NBFCs faced a severe lack of liquidity owing to the IL&FS crisis. During this time bigger NBFCs stopped lending to small ones and banks also turned down their lending requests.
In a bid to ease credit, the RBI relaxed the securitisation norms in November. Bringing down the minimum holding period for loans from one year to six months to be eligible for securitisation enabled the microfinance companies and others like IFMR Capital (now known as Northern Arc Capital).