India’s securitisation market reached a record INR1.47 trillion ($15.5bn) in the first half of FY2026-27, up nearly 42% from the same period a year earlier, according to a study by ICRA. The significant increase in activity in the second quarter of FY2026-27 boosted the half-yearly volumes to this all-time high.
Securitisation is the process of converting a pool of loans or other financial assets into marketable securities that can be sold to investors. For example, an Indian bank or non-banking financial company (NBFC) may bundle thousands of vehicle loans, gold loans or personal loans and transfer the rights to receive future repayments to investors. This enables the lender to raise funds and recycle them into fresh lending.
In India, securitisation commonly takes two forms: Pass-Through Certificates (PTCs) and Direct Assignment (DA). Under the PTC route, a pool of loans is transferred to a special-purpose entity, which issues certificates to investors. Investors receive payments generated by borrowers’ repayments. Under DA, a lender directly transfers a portfolio of loans to another financial institution, which acquires the rights to future repayments.
Securitisation helps lenders diversify funding sources, manage balance sheets and transfer some credit exposure. It also gives investors access to diversified portfolios of loan assets, creating an additional channel for deploying funds into the credit market.
Securitisation volume refers to the total monetary value of loans securitised during a specified period, such as a quarter or financial year. Measured in rupees, it may include both PTC and DA transactions, depending on the reporting methodology. Rising volumes can indicate stronger investor demand and greater use of securitisation by lenders to meet funding needs. The trend can support credit availability for households and businesses, particularly through NBFCs. However, higher volumes alone do not necessarily indicate improved market health, as loan quality, default risks and investor appetite also influence the sustainability of growth.
ICRA estimates that India’s securitisation volumes reached INR860bn in the second quarter of FY2026-27, driven by stronger activity in gold loan-backed transactions, a recovery in vehicle loan securitisation and steady demand for securitised MSME and business loans. Securitisation volumes grew in H1 FY2026-27 as non-banking financial companies continued to rely on this route to meet their funding needs.
Sachin Joglekar, vice president and co-group head of structured finance ratings, ICRA, said: “As witnessed at the start of the fiscal year, gold loans continue to lead the overall growth in securitisation volumes in H1 2026-27, recording an increase of about 1.5 times over the previous year. At the same time, traditional segments such as vehicle, MSME/business loans and mortgage loans have maintained a steady pace of growth, supporting the overall volumes.”
Joglekar added that the strong volumes recorded in the first half lend support to ICRA’s 2026-27 securitisation volume estimate of at least INR2.6-2.7 trillion, marking an all-time high.
Looking at the segment-wise performance, gold loans recorded the sharpest growth while vehicle loan securitisation recaptured some of its lost ground in H1 2026-27. Vehicle loans accounted for one-third of the overall volumes, compared with a 25% share in Q1 2026-27, with some of the lenders either re-entering the market or increasing their sell-down volumes in the second quarter. Following gold loans and vehicle loans, mortgage loans, small business loans and micro loans formed the other key asset classes, with their shares ranging between 12% and 15% of the overall H1 2026-27 volumes.
PTCs and DAs each accounted for roughly half of transaction volumes, maintaining the balance seen in the previous quarter. The period also featured several large transactions by a private sector bank, while demand for retail loan-backed assets supported market activity, ICRA said.
India’s growing securitisation market is particularly relevant because non-banking financial companies (NBFCs) play an important role in financing retail borrowers and smaller businesses. NBFCs accounted for nearly 95% of securitisation issuances in the first half, maintaining their dominance in the market, according to a separate report by Crisil Ratings. The quarter also saw several large transactions involving a private sector bank. Demand for securities backed by retail loan portfolios continued to support market activity.
The composition of underlying assets is also shaping transaction structures. Vehicle loans are primarily securitised through the PTC route, whereas gold loans are generally transferred through DA transactions. The growing share of gold loans has therefore increased the proportion of DA transactions, said Deepanshu Singla, director at Crisil Ratings.
Banks remained the largest investor group, accounting for nearly 90% of total investments during the period. However, the investor base continued to broaden, with foreign banks increasing their share to almost 20%.
Their participation was supported by priority sector lending (PSL) requirements and the potential for attractive risk-adjusted returns, particularly from securitised portfolios backed by non-priority sector loans (NPSL).
NBFCs also expanded their role as investors, helping deepen the market and improve liquidity, Crisil said.
Payal Anand, associate director at Crisil Ratings, said growing interest from foreign banks and other non-traditional investors reflected the expanding appeal of securitised assets. Competitive yields and access to diversified portfolios of retail loans were attracting investors, while broader participation was helping establish securitisation as an additional source of risk-adjusted returns, she added.