Retail Asset Securitisation Up 6% to ₹52,000 Crore
Why in the news
Securitisation of retail loans grew modestly in April-June 2025, and the first RMBS deal in the country added a new long-term funding route.
Key facts
- Growth: 6% year on year in Q1 FY26.
- Volume: ₹52,000 crore.
- Milestone: India’s first RMBS transaction.
About securitisation
It means bundling illiquid financial assets, mainly loans, and converting the bundle into tradable securities. Benefits: liquidity for lenders, spreading of risk across investors, and capital reaching underserved sectors.
How the process runs
- Origination: a bank or NBFC lends to borrowers (home, car or business loans).
- Pooling: similar loans are grouped into an asset pool.
- SPV creation: a Special Purpose Vehicle holds the pool apart from the lender’s balance sheet, shielding investors if the lender fails.
- Transfer: the lender sells the pool to the SPV, clears the loans from its books and reuses the cash to lend again.
- Tranching: the pool is split by risk.
- Credit enhancement: extra collateral, reserve funds, insurance or third-party guarantees.
- Rating: agencies such as CRISIL, ICRA and CARE grade each tranche.
- Sale: brokers or investment banks place the securities with mutual funds, insurers and pension funds.
- Payout and servicing: repayments flow to investors, and a servicer tracks performance and reports it.
Tranche types
| Tranche | Risk | Payment order |
|---|---|---|
| Senior | Low | First |
| Mezzanine | Moderate | Middle |
| Junior or equity | High | Last |
Exam angle
- Full form: RMBS = Residential Mortgage-Backed Securitisation.
- Entity that holds the pool: Special Purpose Vehicle.
- Rating agencies named: CRISIL, ICRA, CARE.