India Ratings and Research (Ind-Ra) witnessed a continued improvement in the performance of securitisation transactions with the increase in September 2021 collections and a drop in delinquencies percentage across asset classes. This came on the back of successful roll-out of Covid-19 vaccination in the country, recovering demand in most sectors and expectation of economic growth, which has also been reflected through lower credit enhancement utilisation in October 2021 pay-out compared to 2QFY22. Overdue loans in softer delinquency continue to perform, improving total collections month-on-month. Therefore, current collection numbers may not correctly depict the improvement in collections.

With improving market sentiments, business disruptions from any further covid wave and the risk of its effects on the performance of rated transactions are reducing gradually. The agency has recently resolved Rating Watch Negative on one of the transactions to a Stable Outlook, indicating a strong recovery from the underlying borrowers and high credit enhancement (CE) build-up in the transaction.

Broad Improvement in Collections:
1HFY22 witnessed an improvement in collection numbers with current collections moving back to pre-second wave levels across asset classes. As the economy started to open up due to acceleration in vaccine rollout, the average current collections across all Ind-Ra rated transactions inched-up to 79% in September 2021 from 70% in May 2021. Average collection in September 2021 witnessed a sharp improvement in tractor loan pools. The current collections from unsecured business loan transactions are still lagging as compared to the other asset classes (Figure 1). This is primarily because of the non-performance of small ticket-size loans. The pace of improvement in commercial vehicles loan pools is slow due to increased fuel cost, which continues to put pressure on the trucker’s profit margins. 




The agency witnessed a drop in delinquency percentages (Figure 2) for the rated transactions across asset classes except in unsecured business loans. The sharp improvement is seen in all other pools with delinquencies back to pre-second wave levels. However, the agency opines the positive impact of festive season is likely to be seen in the October-November 2021 collections.



Reduction in Utilisation of External CE: Ind-Ra witnessed a further reduction in the proportion of transactions dipping into external CE in October 2021 payout (8%) compared to previous months (June 2021: 21%). Asset classes including business and vehicle loans witnessed CE dip in October payout. About 72% of the transactions considered in the analysis did not dip into external CE during June-October 2021 pay-out months, whereas 3.0% of the transactions dipped into CE in each of the five months (refer Figure 3).



Also, with more of the payouts being made from the collections rather than from CE, Ind-Ra is witnessing a return of build-up of CE in the rated transactions.


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Analyst Names

  • Payal Anand

    Senior Analyst
    India Ratings and Research Pvt Ltd Wockhardt Towers, 4th Floor, West Wing, Bandra Kurla Complex, Bandra East,Mumbai - 400051
    +91 22 40006129

    Prajeesh Jayaram

    Associate Director
    +91 22 40001742

    Media Relation

    Ankur Dahiya

    Manager – Corporate Communication
    +91 22 40356121