Securitised Pool Collections Inoculated Against Disruptions: CRISIL

Monthly collection ratios (MCRs) of securitised pools rated by CRISIL Ratings have remained stable through the third wave. This was because the localized administrative restrictions, introduced in December 2021 and January 2022 to mitigate the effect of the omicron variant of Covid-19, had limited impact on the economic activity. As borrowers' workflows continued unhindered to a large extent, their cash flows stayed largely intact and supported timely loan repayment in securitised pools, resulting in no significant impact on pool collections. It is also evident in the low level of restructuring opted for by borrowers in these pools.

Says Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings, "The restrictions imposed to combat the pandemic's spread in the third wave have been comparatively less intense than those in earlier waves. Additionally, many efforts have been made by several financing entities to digitalise their collection processes. Both these factors have quarantined securitised pool collections from any material impact arising out of pandemic related disruptions during the third wave."

Says Rohit Inamdar, Senior Director, CRISIL Ratings, "Considering the loans in pools underlying securitisation transactions are cherry-picked, their performance vis-à-vis the overall portfolio is usually, comparatively better. Their solid performance in past two years is an indicator to investors that securitisation remains a reliable, time-tested route to gain exposure to quality loan assets. In this regard, their outperformance is a testament to the resilience of securitisation as a process."