While assigning the ratings, CRISIL evaluated the performance of the education loan segment in the country and portfolio performance of the originator among other factors.
Education loan receivables has become the latest asset class in the securitisation market in India, with rating agency CRISIL rating pass-through certificates (PTCs) issued by the Vivriti Victor 002 2018 Trust.
The PTCs – Series A1 and Series A2 – were assigned ratings of ‘Provisional CRISIL AA-(SO)’ and ‘Provisional CRISIL A+(SO)’, respectively.
In February 2018, fin-tech marketplace Vivriti Capital announced the close of a first-of-its-kind securitisation of education loans aggregating Rs 108 crore.
The loans were originated by Avanse Financial Services, part of the Dewan Housing Finance Ltd (DHFL) Group. A bank treasury invested in the PTCs structured and arranged by Vivriti Capital and rated by CRISIL.
CRISIL in a media release said that the ratings are supported by favourable characteristics of the underlying pool of education loan receivables. This includes the ever-current nature of the contracts, seasoning, existence of a co-borrower in all the contracts, and availability of security in a majority of the contracts, as well as structural features like scheduled cashflow subordination and external cash collateral amounting to 29.4 percent and 4 percent of pool principal.
While assigning the ratings, CRISIL evaluated the performance of the education loan segment in the country, portfolio performance of the originator, and the unique features of the asset class.
The rating agency estimates the size of the education loan market at over Rs 75,000 crore, having grown at a compounded annual growth rate of over 15 percent over the past ten years.
The segment is dominated by scheduled commercial banks extending education loans (eligible to be considered as priority sector lending) with a ticket size of less than Rs 10 lakh, and higher ticket personal loans taken for educational purposes. Non-banks have also been steadily scaling up their loan book over the last few years.
Rohit Inamdar, Senior Director, CRISIL Ratings, said: “Well-underwritten education loan portfolios lend themselves to securitisation given the long-term nature of assets and attractive yields on the PTCs. For originators, securitisation provides much-needed capital relief and liquidity.”
Earlier this year, CRISIL had flagged the emergence of new asset classes in the Indian securitisation market, driven by two key developments: widening of the investor base and growing demand for non-priority sector loan securitisation. Education loans are the latest entrant in the securitisation market.
Source : https://www.moneycontrol.com/news/business/economy/education-loans-become-latest-asset-class-in-indian-securitisation-market-2529059.html