Global banks drive India asset-backed securities sales to record

[MUMBAI] India’s asset-backed securities market has surged to a record, as global banks ramp up purchases to gain exposure to one of the world’s fastest-growing major economies.

Foreign banks’ share in total issuance grew to about 35 per cent in the financial year ended March, from 28 per cent to 30 per cent in each of the preceding two fiscal years, said Krishnan Sitaraman, chief ratings officer at Crisil Ratings.

Based on the total asset-backed debt sales of 1.53 trillion rupees (S$20.9 billion) in the year ended March, it translates to roughly US$5.6 billion of purchases by overseas lenders.

Barclays, Citigroup, JPMorgan Chase and Standard Chartered are among foreign lenders to have stepped up investments in such debt, said people familiar with the matter, who asked not to be identified discussing private information.

Several factors are driving the shift.

India’s retail credit market is growing rapidly, creating more loans that can be bundled and sold as securities. For banks, buying these loans can help them meet local priority-sector lending rules, which mandate that a portion of lending go to sectors including farming.

These transactions also consume less regulatory capital than making some loans directly, Sitaraman added.

“For foreign investors, the appeal is not just yield pickup, but access to a fast-growing domestic credit market,” said Aditya Bagree, head of markets for India and the sub-continent at Citigroup.

Representatives at Barclays and Citi did not respond to requests for comment. Spokespersons for JPMorgan and Standard Chartered declined to comment.

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Asset-backed securities are debt instruments backed by a pool of loans, such as mortgages, vehicles, unsecured personal credit and gold loans. In India, securitisation deals take two forms: ABS – locally known as pass-through certificates – and direct assignments.

Non-banking entities typically securitise loan portfolios with remaining maturities of one to 2.5 years, said two foreign banks involved in such transactions. The average coupons range between 7.3 and 11.5 per cent for securities rated AAA, AA and A, Crisil data showed.

The market got a boost when billionaire Mukesh Ambani’s Reliance Group companies raised 210 billion rupees through asset-backed securities in September 2025, marking one of the largest transactions of its kind in the country.

Despite rapid growth, India’s market remains much smaller than China’s total ABS issuance of 2.28 trillion yuan (S$435.4 billion) in 2025. Still, the increased demand has prompted local shadow lenders to issue more such securities to diversify funding sources.

HDB Financial Services, a unit of India’s largest private lender HDFC Bank, raised nearly 3 per cent of its total liabilities via pass-through certificates as at end-March, compared with none the year before, said chief financial officer Jaykumar Shah.

For Aye Finance, securitised borrowings were 75 to 100 basis points cheaper than tapping the local bond market, because the transactions carried ratings three to four notches above the company’s own credit rating, chief financial officer Gaurav Seth said. 

“A lot of global banks and investors have shown interest, because they get access to Indian assets and credits without having to actually give a loan or invest in the bond,” he noted. BLOOMBERG