GST wor­ries: Se­cu­ri­ti­sa­tion mar­ket H1 vol­ume dips 20%

Millennium Post - - BUSINESS -

MUM­BAI: The coun­try's se­cu­ri­ti­sa­tion mar­ket has seen a 20 per cent fall in trans­ac­tion vol­umes to Rs 36,000 crore in the first half of fis­cal 2017-18 due to GST un­cer­tainty and pick up in pri­or­ity sec­tor lend­ing cer­tifi­cate mar­ket, said a re­port on Thurs­day.

Trans­ac­tion vol­umes in the se­cu­ri­ti­sa­tion mar­ket was Rs 45,000 crore in the year-ago pe­riod.

"A sharp pick-up in pri­or­ity sec­tor lend­ing cer­tifi­cates (PSLCS) mar­ket an al­ter­nate route avail­able to banks to meet their PSL re­quire­ments - and lack of clar­ity sur­round­ing in­ci­dence of GST on the as­sign­ment of se­cured loan re­ceiv­ables were the ma­jor fac­tors con­tribut­ing to the slow­down," said the re­port re­leased by rat­ing agency Icra.

Se­cu­ri­ti­sa­tion mar­ket is char­ac­terised by two types of trans­ac­tions rated pass through cer­tifi­cates (PTC) trans­ac­tions and un­rated di­rect as­sign­ment (D A) trans­ac­tions.

Vol­umes for PTC trans­ac­tions in H1 FY18 de­clined sharply of around 30 per cent fall­ing to Rs 15,200 crore from Rs 21,500 crore in H1 FY17.

D A trans­ac­tions saw vol­umes fall­ing by around 13 per cent dur­ing the same pe­riod.

"Out of the to­tal mar­ket vol­ume of nearly Rs 36,000 crore, around 70 per cent com­prised of PSL as­sets. With PSL still the driv­ing force be­hind se­cu­ri­ti­sa­tion in the coun­try, a shift by banks to­wards PSLCS could lead to stag­na­tion of se­cu­ri­ti­sa­tion mar­ket vol­umes in the com­ing years," the re­port said.

Se­cu­ri­ti­sa­tion vol­umes have dropped across as­set classes on a y-o-y ba­sis in the cur­rent fis­cal.

While ve­hi­cle loans ex­hib­ited a small cor­rec­tion of only 3 per cent, the sharpest drop was seen in mi­cro loan se­cu­ri­ti­sa­tion with vol­umes for this as­set class com­ing down by around 80 per cent.

The re­duc­tion seen in mi­cro loan se­cu­ri­ti­sa­tion was the largest con­trib­u­tor to the over­all re­duc­tion in PTC vol­umes.

Other as­set classes like un­se­cured busi­ness loans and trac­tor loans have also seen vol­umes drop by more than 50 per cent when com­pared to last year.

A sim­i­lar trend was seen for hous­ing and LAP loans as well although the ex­tent of cor­rec­tion is slightly lower trans­ac­tion vol­umes.

The re­port fur­ther said se­cu­ri­ti­sa­tion mar­ket vol­umes tend to pick up in the sec­ond half of the year (pre­vi­ous year was how­ever an aber­ra­tion on ac­count of de­mon­eti­sa­tion).

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