Mumbai, Oct 14 India's total securitisation issuance reached a record high of Rs 2.35 trillion (approximately $27 billion) in fiscal 2025, with about 22 per cent allocated to residential mortgage-backed securities (RMBS), a report has said.
The bulk of the RMBS issuance has been through bilateral assignments, according to the data compiled by S&P Global Ratings.
Pass-through certificate structures form a significantly smaller segment of the RMBS market compared to their share in India's overall securitisation market.
"In our view, the first RMBS transaction announced by RMBS Development Co. Ltd. (RDCL) could improve investor confidence and pave the way for further issuance based on pass-through certificates (over bilateral assignments), in line with typical structures in global securitisation markets," the report said.
It further emphasised that India could draw more domestic and offshore investors into its mortgage securitisation market as the country has emerged as one of the fastest-growing global economies.
It has favourable demographics, rapid urbanisation, and strong policy support to meet its growing housing demand.
"This has propelled housing market growth. New residential mortgage origination volumes rose about 40 per cent between fiscal years 2020 and 2025 (years ended March 31)," the report said.
Concurrently, issuer interest in diversifying funding, developing offshore investor interest, and regulatory support for investments by foreign portfolio investors foster the increased use of securitisation to support financing.
The listing of the transaction on the National Stock Exchange (NSE), along with the publicly available offering circular and investor reports, enhances market transparency.
"We believe a transparent framework and standardisation of documents in line with global standards can support broadening the investor base with a good mix of domestic and offshore investors, and aid price discovery," the global rating agency said.
At the same time, from our rating perspective, we believe some features would warrant a deeper assessment together with other transaction features.
The report compared the setup of institutions similar to RDCL in other regions globally, as well as typical transaction features of mortgage-backed securities issued by them.
"We also discuss our considerations for rating RMBS transactions in India," the report noted.
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