OREANDA-NEWS. Fitch says that the build-up in delinquencies for Indian asset-backed securities (ABS) transactions that closed in 2015 was slower than that in 2014, a sign that overall delinquencies have stabilised. Delinquencies for 2013- and 2014-issued transactions fell in 2015 mainly due to a resilient economy that rebounded from rather slow growth in 2014.

The agency expects India's requirements that banks maintain a certain amount of exposure to designated priority sectors, such as agriculture and SMEs, to push foreign banks to increase their investment in Indian ABS transactions. ABS investment is one of the main channels by which foreign banks can satisfy priority sector lending (PSL) requirements, unlike local banks, which lend directly to PSL borrowers.

Tractor loans have accounted for almost 15% of securitised pools backing Fitch-rated transactions since 1H15, compared with a maximum of 10% before that. Fitch expects tractor loans to form a larger part of Indian ABS transactions due to greater demand from institutional investors for exposure to the agricultural priority sector, and originators of Fitch-rated transactions have now run tractor-lending businesses long enough for tractor-loan data to include a stress period.