India’s securitisation market—where lenders bundle up individual loans and sell them to investors to unlock quick capital—just capped its strongest first quarter in history. Total issuances for Q1 FY27 (April–June 2026) jumped 22% year-on-year to a record ₹60,000 crore, according to a new report by CRISIL Ratings.
The blockbuster quarter was driven almost entirely by Non-Banking Financial Companies (NBFCs), which originated over 98% of the total market volume. However, the biggest story of the quarter is a fundamental shake-up in the underlying assets being sold, with gold loans officially overtaking vehicle loans as the country’s largest securitised asset class for the very first time.
Securitisation: How It Works
Think of securitisation as a financial recycling system. A gold loan company or vehicle lender gives out thousands of small retail loans. Instead of waiting years for customers to pay them back with interest, the lender pools these loans together and sells them to large banks. The lender gets instant cash to hand out fresh loans, while the buying bank gets a steady, predictable stream of interest income.
The New Asset Mix: Gold Takes the Crown
For years, commercial and personal vehicle loans dominated the securitisation pools. But a combination of explosive gold-backed credit demand and a strategic slowdown from a major automotive loan originator created a historic flip in the rankings:
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Gold Loans (31% Share): Gold emerged as the undisputed king of the market. Financiers rode a wave of heavy portfolio growth, heavily leaning on the Direct Assignment (DA) route (selling the loans directly to buyers rather than turning them into tradeable bonds). Direct assignments accounted for 54% of all Q1 issuances, and an overwhelming 87% of all gold loan transactions were executed this way.
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Vehicle Loans (26% Share): Once the market leader, vehicle loans slid into second place, primarily due to lower volume contributions from a major, historically active market originator.
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Microfinance (14% Share): Boosted by improved asset quality and strong institutional demand for priority-sector lending assets, microfinance loans saw their market share expand by 300 basis points.
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Mortgage-Backed Securities (12% Share): Residential mortgages fell sharply by 900 basis points compared to last year, mostly because a massive private bank pulled back on its previously heavy mortgage bond issuances.
Why Institutional Investors are Chasing Gold
The primary buyers in this ecosystem remain commercial banks—spanning public sector, private, and foreign institutions—who scooped up roughly 90% of all Q1 issuances.
For these investors, particularly public sector banks, gold loans are considered an incredibly safe bet. Gold loans carry negligible historical credit losses because they are heavily backed by physical collateral. Furthermore, investing in these pools allows banks to meet their mandatory priority-sector targets while enjoying favorable capital risk-weight advantages.
Looking Ahead: The Deposit-Credit Gap
CRISIL projects that this record-breaking growth momentum will continue through the rest of the financial year. With traditional bank deposit growth continuing to lag behind hot retail credit demand across India, banks with high credit-to-deposit ratios are expected to increasingly rely on securitisation as a strategic tool to keep their lending engines well-funded. The number of unique lenders accessing the market has already expanded to 115 this quarter, up from 90 during the same period last year.
