Microfinance loan securitisation volumes rose by 10% in Q1 FY2026 after declining in FY2025 on account of the investor aversion and muted appetite given high stress seen in the industry. While direct assignment (DA) remains the preferred securitisation route, for the first time in Q1 FY2026, PTC volumes crossed those of DA. There has been a preference for PTC issuances among better rated originators.

• Microfinance loan securitisation volumes had seen a sharp decline in FY2025, driven by lower portfolio collections, investor aversion and lower disbursements by originators, thereby reducing the pool availability. However, Q1 FY2026 showed signs of recovery, with volumes rising QoQ and YoY.
• While direct assignment (DA) remains the preferred securitisation route, for the first time in Q1 FY2026, pass through certificates (PTC) volumes surpassed those of DA. This reflects a broader trend and investor preference for PTC over DA, given the availability of credit enhancement