Securitization will still play a key role as an alternative for Indian nonbank finance companies in fiscal 2027, S&P Global Ratings said in a Monday release.
Total securitization issuance rose by about 8.5% year on year to 2.55 trillion rupees in fiscal 2026, supported by a large expansion in originations by nonbank finance companies, S&P said.
Nonbank finance companies will continue to avail of alternative funding sources such as securitization for funding diversification and borrowing cost reduction, S&P credit analyst Vidhya Venkatachalam said.
Vehicle finance-backed securitization was high at about 40% of total issuance, supported by retained originations from large vehicle financiers, S&P said.
S&P saw largely steady originations and asset performance, although a protracted Middle East war and impacts on fuel prices and supply chain could weaken the performance of some asset classes, Venkatachalam said.
Sectors such as small-ticket and nonprime unsecured consumer finance, micro loans against property, microfinance, and commercial vehicles would be the first to feel the impacts of the Middle East conflict, the rating agency said.
The effects could spill over gradually into secured products such as vehicle loans and affordable housing, but controlled underwriting practices should ease some credit risk in securitization transactions, according to S&P.