Friday, July 11, 2025
  • Home
  • About us
  • Privacy policy
  • Advertise with us
  • Contact us
Fii News Logo
No Result
View All Result
  • Tenders
  • Projects
  • Markets
  • Manufacturing
  • Investment
  • Technology
  • Exports
Newsletter
  • Tenders
  • Projects
  • Markets
  • Manufacturing
  • Investment
  • Technology
  • Exports
Fiinews
No Result
View All Result
Home Banking & Finance

Dafria warns of resurgences in Covid infections and a lockdown

Fiinews by Fiinews
January 12, 2022
in Banking & Finance, Health, Investment
Reading Time: 3 mins read
A A
0
ICRA
0
SHARES
10
VIEWS
LinkedinShare on Twitter

0:00

States may impose stringent lockdowns to control the spread of virus

ICRA Vice President and Group Head – Structured Finance Ratings Abishek Dafria has warned that India faces resurgence of Covid infections and some states have already started imposing restrictions though of a milder nature so far.

“Lockdowns not only impact the collection ability of lenders as staff members fall ill, but also the income generating ability of the borrowers for a temporary period. In the event that the severity of the Covid infections grows and results in higher hospitalisation rates, the State Governments may impose stringent lockdowns to control the spread of the virus,” he said in a release on 11 Jan 2022.

Securitisation volumes could thus be affected in Q4 FY2022 because the NBFCs and HFCs may curtail disbursements, especially to Covid impacted sectors, and investors would prefer to wait for the threat to subside.

“Higher proportion of securitisation transactions are usually placed in March and thus we hope the spread of virus would be contained sooner. Nonetheless, lower disbursements would also impact the growth of the securitisation market in FY2023, which is still at 50% of the volumes seen in the pre-Covid period.”

Traditionally, securitisation through Direct Assignment (DA) transactions (bilateral assignment of pool of retail loans from one entity to another) has accounted for about two-thirds of total volumes. The balance one-thirds share is accounted by Pass Through Certificate (PTC) transactions (loans are sold to an SPV which issues PTCs).

Due to the concerns around the Covid-related disruptions, preference for PTCs has increased (~45% share in Q3 volumes) since the credit enhancements in such structures would be able to absorb higher-than-expected losses than may arise in the transaction. Also, preference for secured asset class has continued with mortgage-backed loans and gold loans accounting for ~42% and ~10% respectively out of total securitisation done in Q3 FY2022.

ICRA Assistant Vice President and Sector Head Sachin Joglekar added, “Investor preference tends to shift towards PTCs during uncertain times as PTCs offer credit enhancement unlike DAs.

“The split between PTC and DA has alternated this year with share of PTCs increasing in Q1 FY2022 at time of the second wave of the pandemic, and again in Q3 FY2022 which saw the rising share of Omicron cases towards end of the quarter.”

Another visible trend is preference of investors towards secured asset classes like mortgage loans and gold loans whereas aversion to unsecured asset classes like microfinance and small business loans as the performance of the former have been better during the post-Covid period, he said.

“For ICRA-rated PTC transactions, the credit enhancements are seen to be adequate to cover the shortfalls that may occur temporarily due to lockdowns. However, any prolonged periods of lockdown would be a credit negative,” said Joglekar.

Securitisation volumes, originated largely by non-banking financial companies (NBFC)s and housing finance companies (HFCs), are likely to be negatively impacted for FY2022, following the surge in fresh Covid infections and likely threat of localised lockdowns, said ICRA.

Accordingly, ICRA expects the full year volumes to be around Rs.1.0 ~ Rs.1.1 lakh crore, marginally lower than its earlier estimates of about Rs 1.2 lakh crore.

Nonetheless, for the year securitisation volumes would still be higher by about 15% to 20% over the volumes of Rs.87,000 crore reported in FY2021.

For 9M FY2022, securitisation volumes stood at close to Rs.71,800 crore compared to ~Rs.47,100 crores in 9M FY2021.

The volumes in Q3 FY2022 itself were about Rs.29,000 crore i.e. 13% Q-o-Q growth and 19% Y-o-Y growth and were marginally impacted by the threat of the spreading Omicron variant towards end of the quarter, said ICRA. fiinews.com

Tags: ICRA Ltd
ShareTweetShare

Related Posts

IVCA
Investment

Invest: India requires $150-$200bn for renewables

by Fiinews
July 10, 2025
0
25

Mumbai to host Renewable Energy Summit 2025 India will require another US$150-US$200 billion investments for renewables over the next five...

Veeda Lifesciences Logo
Investment

Invest: Veeda to leverage Mango AI capabilities

by Fiinews
July 9, 2025
0
12

Dr Misra integrating LLM-GenAI into Querent™ for efficiencies Veeda Lifesciences, a global contract research organization (CRO) from Ahmedabad, is investing...

IPA

Invest: Serendipity Space raises pre-seed round

July 5, 2025
17
Indian Steel Association

Invest: India needs $200bn for expansion of mills

July 4, 2025
19
PIB

Invest: PSBs told to strengthen credit to MSMEs

June 29, 2025
17
PIB

Invest: Minister wants further development of IFSCS

June 28, 2025
21
SBI YONO

POPULAR NEWS

  • Cristina Dnv

    Projects: Indian yards set to build green ships, says DNV expert

    0 shares
    Share 0 Tweet 0
  • Market: Indian-origin UGF scales heritage consumer brands globally

    0 shares
    Share 0 Tweet 0
  • Technologies: Royal Diamond sponsors aerspace Industries’ drones in UAE

    0 shares
    Share 0 Tweet 0
  • Investments: Foreign investors see India as long-term destination for fund placings

    0 shares
    Share 0 Tweet 0
  • Markets: Blue Dart maintains positive outlook on India

    0 shares
    Share 0 Tweet 0

Fiinews.com features through news articles on business opportunities in the Indian market for the benefits of foreigners. It is also a platform for international businesses to showcase through elaborate articles on their products & services to the Indian consumers and corporations exploiting industrialisation of the country.

7Clicks Media is a Singapore based Media & PR company offering over 100,000
impressions via our targeted communication strategy.

It is led by editor-in-chief Gurdip Singh who has worked over 45 years reporting on
Asian businesses.

Recent News

  • Project: Japanese delegation inspects DMIC progress
  • Project: Mindset change is critical for innovation
  • Project: 4,000% in installed solar capacity
  • Project: EV policies part of climate goals
  • Tech: ansrsource-ANSR reshape talent across India

Pages

  • About US
  • ADVERTISE ON FIINEWS.COM
  • CONTACT US
  • EVENTS
  • FII-NEWS.COM PDF ARCHIVE
  • Home
  • News
  • PRIVACY POLICY

Subscribe to Newsletter

  • About
  • Advertise
  • Careers
  • Contact us

© 2024 FIINEWS - Design and developed by 7clicksmedia.

No Result
View All Result
  • Tenders
  • Projects
  • Markets
  • Manufacturing
  • Investment
  • Technology
  • Exports

© 2024 FIINEWS - Design and developed by 7clicksmedia.