Soon after liquidity crisis in the NBFC
sector in September 2018 when IL&FS defaulted on its loan obligation, SBI had announced that it would buy the portfolios of NBFCs
to ease the liquidity situation.
For instance, Arohan, one of the biggest NBFC-MFIs, sold close to Rs 600 crore loans to SBI, according to Manoj Nambiar, managing director, Arohan.
“This year, SBI was one of the biggest buyers in the securitisation markets in the NBFC-MFI sector,” said another top official of an NBFC-MFI.
According to industry experts, in 2017-18, the volume of securitisation deals by NBFC-MFIs was low due to the presence of portfolio originating at the time of demonetisation, which had high rate of default.
ICRA notes that last year, much of the securitisation was on account of direct assignment. According to ICRA estimates, transaction volumes undertaken by NBFC-MFIs on account of direct assignment were around Rs 13,500 crore for FY19, against only Rs 4,000 crore and Rs 3,000 crore in FY18 and FY17, respectively.
Notably, in January this year, 18 micro finance
non-banking financial companies (NBFC-MFIs) for the first time pooled assets for securitisation in order to collectively tide over a liquidity problem in the sector.
“In addition to the increase in volume, this time, the securtisation market in the MFI sector saw innovation. The pool was created to tide over liquidity crunch, bringing together portfolios of both small and big MFIs,” said Harsh Srivastava, CEO, Microfinance Institutions Network.
“Securitisation has always been an important funding tool for NBFC-MFIs, but dependence was particularly high during the second half of fiscal 2019,” according to Vibhor Mittal, group head — structured finance
ratings at ICRA.
“In FY18 and first half of FY19, securitisation contributed to only 18-20 per cent of the overall disbursements. However, this number leapfrogged to 37 per cent and estimated 50 per cent in Q3 FY19 and Q4 FY19, respectively.