Rating Rationale

Supporting Factors

High amortisation and credit support available in the structure
- 13 months post securitisation, The pool is amortised by 86.5% which has led to an increase in credit cover available to future investor payouts. Cedit collateral of Rs 5.31 crore provides sufficient cushion for servicing investor payouts (80.4% of future payouts is covered by the credit collateral).
Low threshold collection ratio
- The minimum collection ratio to service future investor payouts stands at 10.3%.

Constraining Factors

Ability to recover from overdue contracts
- The microfinance industry remains susceptible to risks arising from socio-political issues and regulatory changes. Such events have the ability to disrupt loan repayment by the underlying borrowers.
- The unsecured nature of microfinance loans and the inherent modest credit risk profile of the borrowers also make recovery from overdues more challenging.

These aspects have been factored by CRISIL in its rating analysis.

Liquidity Position
The credit-cum-liquidity enhancement available in the transaction is Rs 5.31 crore, which is in the form of a fixed deposit with DCB Bank Ltd. The credit enhancement fully covers interest payouts for Series A1 and Series A2 PTCs, which are promised on a monthly basis.

Pool performance summary (after the April 2019 payouts)

Parameters	Vivriti Naboo 002 2018
Asset class	Microfinance loan receivables
Structure	Par with EIS
Months post securitisation	13
Amortisation	86.5%
Credit collateral as a percentage of future payouts	80.4%
Cash collateral utilisation	Nil
Cumulative collection ratio (CCR)^!	99.2%
3-month average MCR^!	98.7%
Threshold collection ratio (TCR)^!	10.3%
Total overdues^$	0.6%

!CCR = {Total collections in the pool / (Total billings + opening overdues amounts at the time of securitisation)}
^!MCR = Monthly collections in the pool / Monthly billings
^!TCR = The minimum cumulative collection ratio required on a pool's future cash flow, to be able to make investor payouts on time
^$Total overdues = (Total overdues in the pool expressed as a percentage of initial pool principal)

Rating assumptions

To assess the base case shortfalls for the transaction, CRISIL has analysed the moving portfolio delinquency information on portfolio for performance from May 2008 to March 2019.

60+ days past due (dpd) and 0+ dpd on the portfolio stood at 3.1% and 3.4%, respectively, as of March 2019. Due to demonetisation, the 60+ dpd and 0+ dpd peaks observed were 22.1% and 47.5%, respectively, but there have been recoveries from the peaks observed.

Based on these aspects, CRISIL has estimated base case shortfalls in the pool at 4.0-6.0% of cash flow.

CRISIL has assumed a stressed monthly prepayment rate of 0.5-1.0% in its analysis.
CRISIL has adequately factored in the risks arising on account of counterparties (refer to counterparty details below).
CRISIL has run sensitivities based on various shortfall curves (front-ended, back-ended, and normal) and has adequately factored the same in its analysis.

Counterparty details

Capacity	Counterparty Name	Counterparty Rating/ Track record	Effect on credit ratings in case of non-performance
Originator	Satin	'CRISIL A1'	No effect.
Servicer	Satin	'CRISIL A1'	Significant effect, because of change in servicing quality and replacement cost of servicer. However, CRISIL does not envisage the need for replacement. The trust or investor has the right to change the servicer with an intimation to CRISIL.
Collection and payout account bank	DCB Bank Ltd	'CRISIL AA-/Stable/CRISIL A1+'	Negligible effect. Account bank can be changed without impacting the rating.
Collateral in the form of fixed deposit	DCB Bank Ltd	'CRISIL AA-/Stable/CRISIL A1+'	Negligible effect. Bank with which the fixed deposit is maintained can be changed without impacting the rating.
Trustee	CTL	Adequate track record	Negligible effect. Can be replaced at minimal cost.

About the Originator
Satin is a leading non-banking financial company-microfinance institution (NBFC-MFI) in India with a strong presence in the underpenetrated regions of north and central India. It started operations in 1990 as a provider of individual and small business loans and savings services to urban shopkeepers. It got registered as an NBFC with the Reserve Bank of India in 1998 and converted into an NBFC-MFI in November 2013.

Satin primarily provides collateral-free microcredit facilities (based on joint liability group model) to economically active women, who otherwise have limited access to mainstream financial service providers. The company also offer loans to individual businesses and to micro, small, and medium enterprises (MSMEs), product loans for financing purchase of solar lamps, and loans for development of water connection and sanitation facilities. In 2017, Satin incorporated a wholly owned housing financial subsidiary to diversify into the housing finance segment. Entry into the MSME and housing finance segments has allowed the company to diversify its product suite. Its operations are spread across 18 states and union territories in India, with a focus on rural and semi-urban areas. Most of the regions in which the company operates have moderate or low microfinance penetration.

Past Rated Pools
CRISIL has ratings outstanding on six transactions originated by Satin. CRISIL is receiving monthly perfoamnce reports pertaining to these transaction.