Higher yields offered by the securitisation market is attracting High Networth Investors, who have recently started investing in these instruments.
While they are no major investors in this space yet, HNIs have recently shown interest in transactions backed by gold loans.
A recent report by Crisil Ratings said, "There are also clear signs that participation in the securitisation market is widening – gold loans have emerged as a new asset class, the number of originators accessing the securitisation market has increased to 25 from 21 in the previous year, and even insurance companies and wealth management clients have begun investing in a few transactions."
Pawan Agrawal, Senior Director, Crisil Ratings, said these investments offer a better yield, of about 14%, and have a tenor of 1-2 years.
"Relatively higher returns make such transactions relevant for this category of investors," he said.
Securitisation is the practice of pooling various types of debt such as mortgages, auto loans, gold loans or credit card loans and selling them as bonds or pass-through securities, to various investors. Usually, HNIs invest in such instruments through their wealth advisors.
HNIs have invested in securities that have gold loans as the underlying.