Global ratings agency, Fitch Ratings, said the 180 days past due (dpd) two-wheeler loans (loans where EMIs are overdue for over 90 days) have reached as high as 6 per cent of original principal outstanding in some pools compared with a maximum of 3.6 per cent in 2006, Fitch said in its reports on pools of securitised loans.
Securitisation of loans is a process where banks sell a pool of loan assets split into units of securities to investors.
Personal loan pools, Fitch Ratings said, have shown higher delinquency compared to other asset categories. The underlying pools of personal loans have shown weak performance, with about 5.5 per cent of the original pool being over 90 days past due delinquent.
Fitch said it monitors closely the key performance parameters for two personal loans-backed transactions originated by ICICI Bank. They include the 90-day past due and 180-day past due prepayments, collection efficiency and charge-offs.
These transactions have performed satisfactorily on account of their structures (e.g. charge-off at 120+dpd to minimise the cost of carry on account of defaulted assets), and adequately sized credit enhancements.
However, the underlying pool of personal loans has shown a weak performance, with about 5.5 per cent of the original pool being over 90-day past due delinquent. The 180-day past due portion of the pool comprises about 4.2 per cent of the original principal outstanding.
The ongoing transaction performance analysis forms an integral part of the ratings process. Clear and timely reporting is essential for assessing current performance and for forming an accurate credit view.
Hence, for active monitoring, Fitch has developed a surveillance process, where the impact of key performance indicators such as delinquencies, prepayment rates, collection efficiency, interest rate movements, and credit enhancement utilisation are examined.
