Rating Rationale

Rating Rationale

June 06, 2025 | Mumbai

Bharat Mortgage PTC Trust 2025 Series I

(Originator: Bajaj Housing Finance Limited)

'Provisional Crisil AAA (SO)' assigned to Series A1 PTCs

Rating Action

Trust Name	Details	Pool Principal (Rs.Crore)	Rated Amount (Rs.Crore)	Original Tenure (Months)^#	Credit Collateral (Rs.Crore)	Ratings/Credit Opinions^@	Rating Action
Bharat Mortgage PTC Trust 2025 Series I	Series A1 PTCs	91.20	86.64	198	3.65	Provisional Crisil AAA (SO)	Provisional Rating Assigned

Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.

1 crore = 10 million

Refer to annexure for Details of Instruments & Bank Facilities
#Indicates final maturity date for the instrument in number of monthly payouts. Actual maturity date will depend on the level of collection shortfalls in the pool, the level of prepayments in the pool, and exercise of the clean-up call option.
^@A prefix of 'Provisional' indicates that the rating centrally factors in the strength of specific structures and is contingent upon occurrence of certain steps or execution of certain documents by the issuer, as applicable, without which the rating would either have been different or not assigned ab initio. This is in compliance with a May 6, 2015 directive ‘Standardizing the term, rating symbol, and manner of disclosure with regards to conditional/ provisional/ in-principle ratings assigned by credit rating agencies' by Securities and Exchange Board of India (SEBI) and April 27, 2021 circular ‘Standardizing and Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt Instruments’ by SEBI.

Detailed Rationale

Crisil Ratings has assigned its ‘Provisional Crisil AAA (SO)’ rating to Series A pass-through certificates (PTCs), issued by ‘Bharat Mortgage PTC Trust 2025 Series I’ under a securitisation transaction originated by Bajaj Housing Finance Limited (BHFL; rated ‘Crisil AAA/Stable/Crisil A1+’), backed by a pool comprising loan against property (LAP) receivables.

The ratings are based on credit quality of the pool backing the transaction, the origination and servicing capabilities of BHFL, credit support available to the PTCs, payment mechanism for the transaction, and soundness of the transaction’s legal structure.

Payment Structure

The transaction has a ‘par with monthly subordinated excess interest spread (EIS)’ structure. The trust settled by the transaction’s Trustee, i.e. Axis Trustees Services Limited will issue Series A1 PTCs and Equity Tranche (unrated) to investors in exchange for a purchase consideration equal to 95.0% of the pool principal and 5.0% of the pool principal at the time of securitisation, respectively.

The transaction has a ‘Par with Excess Interest Spread (EIS)’ structure. Interest payments to Series A1 PTCs are promised on a monthly basis. Principal repayment to Series A1 PTCs, while expected a monthly basis, is promised only on an ultimate basis by the instrument’s legal final maturity date. The cash collateral would be used to meet shortfalls in monthly promised Series A1 PTCs interest payouts and for the ultimate principal repayment of Series A1 PTCs on the legal final maturity date as set out in the waterfall mechanism.

Post redemption of Series A1 PTCs, principal repayment to equity tranche investors is expected on a monthly basis but promised only on an ultimate basis by the instrument’s legal final maturity date. Equity tranche investors are expected to receive residual excess interest spread (EIS) amounts on a monthly basis.

Investor payouts for PTCs are supported by cash collateral, subordination of principal of the equity tranche and EIS. BHFL will continue to service loans in the pool as the servicing agent.

Adequacy of credit enhancement

The investor payouts for PTCs are supported by cash collateral, subordination of equity tranche principal, and subordination of excess interest spread (EIS). On a monthly basis, the cash collateral can be used to make the promised interest payments in case of a shortfall in collections from the pool to Series A1 PTCs. On the Series A1 PTCs final maturity date, the cash collateral can also be used to make the promised principal repayment in case of a shortfall in collections from the pool.

Credit enhancement available in the transaction structure is as below:

Internal credit enhancement from subordination of principal amounting to INR 4.56 crore (5.0% of the initial pool principal), subordination of scheduled EIS, amounting to INR 22.22 crore (24.4% of the initial pool principal).
External credit enhancement in the form of cash collateral amounting to INR 3.65 crore (4.0% of the initial pool principal) which is expected to be maintained as fixed deposits with a bank and lien-marked in favour of the Trustee.

Based on Crisil Ratings assessment, the total credit enhancement available in the transaction (internal – in the form of EIS and principal subordination; and external – in the form of cash collateral) to provides loss absorption against stressed shortfalls in the pool, is commensurate with the rating assigned to the PTCs.

Key Rating Drivers & Detailed Description

Strengths:

Credit enhancement available in the structure:
- Internal credit enhancement from subordination of principal amounting to INR 4.56 crore (5.0% of the initial pool principal), subordination of scheduled EIS, amounting to INR 22.22 crore (24.4% of the initial pool principal).
- External credit enhancement from a cash collateral amounting to INR 3.65 crore (4.0% of the initial pool principal) which is expected to be maintained as fixed deposits with a bank and lien-marked in favour of the Trustee.
Repayment track record of pool borrowers:
- The underlying borrowers have a weighted average bureau score of 776
- All contracts in the pool are current as of the pool cut-off date. Additionally, in the last twelve months, ~96% of the pool POS has been current while the balance pool has never crossed 6 days past due.
Structure of the transaction
- The legal structure envisaged for the transaction entails bankruptcy remoteness of the receivables and credit enhancement from the originator, and adherence to prevailing regulations on securitisations.
- These shall be certified through an independent legal opinion from an external legal counsel.

Weaknesses:

Borrower concentration
- The pool is concentrated in terms of number of borrowers with top 10 borrowers comprising ~19.6% of the pool principal.
Basis risk
- There is basis risk in the transaction as both pool yield (linked to originator's floating reference rate) and the PTC yield (linked to the repo rate) are floating.
Borrowers in the underlying pool could come under pressure due to a challenging macroeconomic environment. Headwinds such as increasing interest rate scenario and increasing costs on account of inflation and geo-political uncertainties. These factors may impact the free cashflows of the borrowers and eventually hamper pool collection ratios.

These aspects have been adequately factored in its rating analysis by Crisil Ratings.

Liquidity: Strong

Liquidity is strong given that the credit enhancement available in the structure is sufficient to cover losses exceeding 1.5 times the base case shortfalls in the pool.

Rating Sensitivity factors

Upward factors:

None as pool is rated AAA (SO)

Downward factors:

Credit enhancement (based on both internal and external credit enhancements) failing to cover losses of 3.5 times the estimated base case shortfalls on the residual cashflows of the pool due to weaker than expected pool collections or interest rate risks.
A downgrade in the rating of the servicer/originator
Non-adherence to the key transaction terms envisaged at the time of the rating

Quality of the asset pool and strength of cashflows

The contracts in the pool pertain to LAP loans originated by BHFL. The pool’s key characteristics as of the cut-off date (30-April-25) are outlined below:

Pool loans have weighted average seasoning of 13.4 months during which it has amortised by 8.3%.
The average disbursement amount for pool loans was ~ Rs 51.6 lakhs, with a weighted average interest rate of 10.28% and a weighted average original tenure of ~13 years.
None of the pool loans had any overdues as of the cut-off date.

Rating assumptions

Background:

PTC investors are taking a direct exposure on the repayment ability of the underlying borrowers in the pool. Credit risk in the transaction is factored through the base case shortfalls expected on the portfolio, which are further adjusted for pool specific characteristics. To assess the base case collection shortfalls for the transaction, Crisil Ratings has analysed the portfolio delinquency movement, 90+ delinquencies for LAP portfolio as of March-25 is 0.5% for Self employed and 0.3% for Salaried.
Base case shortfalls on the portfolio are adjusted based on pool characteristics – which includes seasoning profile and repayment track record, parameters such as original tenure, interest rate, ticket size etc. Crisil Ratings has additionally factored risk arising from borrower & geographic concentration in the pool.
Prepayment is a form of market risk which will result in the reduction of excess interest spread in the transaction. Prepayment risk has been assessed based on historically observed levels of prepayments for similar pools.
Another form of market risk is basis risk in the transaction, the liability side interest rate (linked to repo rate) and asset side interest rate (linked to originator’s FRR) are floating. Crisil Ratings has factored adverse interest rate movement resulting in reduction of excess interest spread in its analysis.

Assumptions:

After making the adjustments on the above factors, the base case shortfalls in the pool by maturity of the transaction is in the range of 2.0% to 2.2% of pool principal.
Monthly prepayment rate of 1.5% to 2.5% has also been applied to the pool principal.

Additional disclosures for Provisional ratings:
The provisional rating is contingent upon execution and receipt of the following documents:

Executed documents:

Trust Deed
Assignment Agreement
Accounts Agreement
Power of Attorney

Other documents:

Information Memorandum
Legal Opinion
Trustee’s Letter
Any other document required as per applicable laws

Additional documents, if any, executed for the transaction should also be provided along with the above documents. The provisional rating shall be converted into a final rating after receipt of transaction documents duly executed within 90 days from the date of issuance of the instrument. The final rating assigned post conversion shall be consistent with the available documents. In case of non-receipt of the duly executed transaction documents within the above-mentioned timelines, the rating committee of Crisil Ratings may grant an extension of up to another 90 days in line with its policy on provisional ratings.

Rating that would have been assigned in absence of the pending documentation:

In the absence of documentation considered while assigning provisional rating as mentioned above, Crisil Ratings would not have assigned any rating.

Risks associated with provisional nature of credit rating:

A prefix of 'Provisional' to the rating symbol indicates that the rating is contingent upon execution of certain documents by the issuer, as applicable. In case the documents received deviate significantly from the expectations, Crisil Ratings may take appropriate action including placing the rating on watch or a rating change, depending on status of progress on a case-to-case basis. In the absence of the pending documentation, the rating on the instrument would not have been assigned ab initio.

About the Originator
BHFL, the housing finance arm of BFL, was incorporated as a wholly-owned subsidiary of Bajaj Finserv Ltd on June 13, 2008. During fiscal 2015, the company became the wholly-owned subsidiary of BFL. On September 24, 2015, BHFL received a Certificate of Registration from NHB to set up its housing finance company. BHFL has been in operation since 2017 and has emerged as one of the largest housing finance companies in India. In September 2024, BHFL got listed to meet the mandatory listing conditions pursuant to BHFL’s classification as an Upper Layer NBFC. Thereafter, the stake of BHFL in the company reduced to 88.75% from 100% previously. As on March 31, 2025, it had assets under management (AUM) of Rs 1,14,684 crore.

Key Financial Indicators

As on/for the period/ for the year ended as per INDAS	Unit	March 31, 2025	March 31, 2024	March 31, 2023	March 31, 2022
Total Assets	Rs crore	1,02,808	81,827	64,654	48,527
Total income	Rs crore	9,576	7,618	5,665	3767
Profit after tax	Rs crore	2,163	1,731	1,258	710
Gross NPA	%	0.29	0.27	0.22	0.31
Gearing	Times	4.1	5.7	5.1	6.1
Return on managed assets*	%	2.0	2.1	2.0	1.4

*Return on managed assets = Reported PAT divided by average of end year managed assets. Managed assets =Total reported assets + DA (direct assignment)

Quality and experience of servicer:

BHFL (rated ‘Crisil AAA/Stable/Crisil A1+’) will continue to service loans assigned to this trust. BHFL has been long standing lender in the mortgage market, collection report with relevant information are expected to be share with trustee in a timely manner.

Risks and concerns for investors and mitigating factors: Based on Crisil Ratings’ assessment, the total credit enhancement available in the transaction (internal – in the form of principal subordination and EIS; and external – in the form of cash collateral) together can mitigate against shortfalls in collection from the pool even after stressing them commensurate with the rating assigned to the PTCs. Crisil Ratings has adequately factored key risks in the transaction including Credit & Market (as highlighted in rating assumptions section), Counterparty and Legal risks. Legal risks are assessed based on detailed analysis of transaction documentation. Risk factored from counterparties are mentioned in the table below:

Counterparty details

Capacity	Counterparty	Rating	Effect on transaction rating in case of non-performance and Provision for appointment of back-up, if any
Originator & Seller	BHFL	'Crisil AAA/Stable/Crisil A1+'	No effect.
Servicer	BHFL	'Crisil AAA/Stable/Crisil A1+'	Significant effect, because of change in servicing quality and replacement cost of the Servicer. However, Crisil Ratings does not currently envisage the need for replacement. The Trustee, on behalf of the investors, shall retain the right to appoint a replacement Servicer in the occurrence of a ‘Servicer Event of Default’ as per the terms of the transaction. Since there is time lag between pool collections and investor payouts. In the interim, the money collected lies with the servicer and may commingle with its own cash flow. As monthly pool collections are commingled only for a short period of time, the short-term credit quality of the servicer determines the commingling risk.
Collection and Payout Account (CPA) Bank	Axis Bank Limited	'Crisil AAA/Crisil AA+/Stable/Crisil A1+'	Negligible effect. As per the terms of the transaction, the Trustee, on behalf of the investors, has the right to change the CPA Bank.
Cash collateral bank	Axis Bank Limited	'Crisil AAA/Crisil AA+/Stable/Crisil A1+'	Negligible effect. As per the terms of the transaction, the Trustee, on behalf of the investors, has the right to change the Bank with which the Cash Collateral fixed deposits are maintained.
Trustee	Axis Trustee Services Limited	Not rated by Crisil Ratings	Negligible effect. As per the terms of the transaction, the Trustee can be replaced by the investors holding majority interest.

A summary of key terms of servicer contract

As per indicative transaction terms, the key points on the role of the servicer to be covered as part of the transaction documents are as below:

The Trustee acting for and on behalf of the investors shall appoint, the servicer for the purpose of collecting, receiving and managing payment of the Receivables into the Collection and Payment Account for the purpose of managing, collecting and receiving the receivables, holding the underlying security and carry out other roles and roles and responsibilities as specified under the transaction documents
The servicer shall receive servicing fees which shall be paid by the trustee in accordance with the Waterfall Mechanism as per the transaction documents.
The servicer shall collect the receivables from the underlying borrowers and deposit the collected amounts in the collection and payment account in a timely manner as per the terms of the transaction documents.
The servicer shall submit to the trustee all the data and reports in the manner and as per the timelines as specified under the transaction documents.
The occurrence of certain events as per the terms of the transaction documents shall be construed as a Servicer Event of Default.

Provision for appointment of back-up servicer: The Trustee (acting on the instructions of the investors) as per the terms of the Servicer Agreement and upon the occurrence of Servicer’s Event of default, shall retain the right to appoint an alternate servicer

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN^{^}

Name of the instrument

Date of
allotment$

Coupon
rate^{* (%)}

Maturity

date^#

Size of the issue (Rs.Crore)

Complexity level

Rating assigned

Cash collateral (Rs.Crore)

Series A1 PTCs

05-Jun-25

Variable

15-Nov-41

86.64

Highly complex

Provisional Crisil AAA (SO)

3.65

$tentative

^ISIN yet to be issued.

#Indicates legal final maturity date for the instrument. Actual maturity date will depend on the level of collection shortfalls in the pool, the level of prepayments in the pool, and exercise of the clean-up call option

*floating yield of repo rate + 1.82%

Annexure - Rating History for last 3 Years

Current

2025 (History)

2024

2023

2022

Start of 2022

Instrument

Type

Outstanding Amount

Rating

Date

Rating

Date

Rating

Date

Rating

Date

Rating

Series A1 PTCs

86.64

Provisional Crisil AAA (SO)

All amounts are in Rs.Cr.

Criteria Details

Links to related criteria

Basics of Ratings (including default recognition, assessing information adequacy)

Criteria for securitisation transactions

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