Delhi Shifts Gears With A New Ev Policy Indias Credit Market Shift The Daily Brief 446

TITLE: Delhi shifts gears with a new EV policy | India’s credit market shift | The Daily Brief #446 CHANNEL: Markets by Zerodha DATE: 2026-04-16 ---TRANSCRIPT--- In today’s episode, we’ll break down two important stories. First, we’ll talk about Delhi shifting gears on its electric gamble and then we’ll talk about what’s happening in India’s loan bazar. Welcome back to the daily brief by Zeroda where we cut through the noise to help you understand what’s actually happening in the most important stories from business and markets. I’m your host Akira and today is Thursday 16th April. Coming to the first story, Delhi has a vehicle problem. As of March 2026, India’s capital city has 87.6 lakh registered vehicles. As per a report by CSE, of all the pollution Delhi generates locally as opposed to what blows in from surrounding regions, those vehicles account for over half. Now why that matters is because while Delhi can’t control crop burning in Punjab or dust storms from Rajasthan, it can control what comes out of tail pipes on its own roads. Arguably transport is the biggest lever the local government can actually pull to control pollution. So partly to respond to this problem, Delhi just announced a new draft EV policy. If it passes through, it would be one of the most aggressive urban EV transitions attempted anywhere in India. Not because the subsidies are extraordinary, but because the policy is the equivalent of someone putting their foot down. Simply, it sets hard deadlines after which you simply cannot register a new petrol or diesel vehicle in key categories. So to understand how we got here, we need to go back a few years first. Now, this isn’t Delhi’s first EV policy that was notified nearly 6 years ago. Its goal was ambitious. EVs should make up 25% of all new vehicle registrations by 2024 and Delhi would become the EV capital of India. The approach was built on providing sweeteners for adoption like subsidies to buyers, road tax waiverss, scrappage incentives and so on. It included a state EV fund which would be financed through pollution sesses and additional road taxes on petrol and diesel vehicles. Now since then Delhi has 4.7 lakh registered EVs about 5.4% of its total vehicle stock. EVs accounted for about 12.7% of new vehicle registrations in FY202526 and that’s a 29% jump in absolute numbers from the previous year and well above the national average of around 8%. The city also consumes more electricity at public charging stations than any other state and roughly a quarter of national public charging consumption. Clearly the policy was not a complete failure but progress was much slower than envisioned. After all, petrol and petrol ethanol vehicles still held approximately 73% of new registrations in FY26. In the overall stack, approximately 95% of Delhi’s vehicles are none. So, where does the 2026 policy differ from the original? Mainly, the policy doesn’t just involve handing out carrots. It also involves sticks. So, in other words, it’s making a switch to EVs more mandatory. Now the policy rolls out deadlines segment by segment starting with the groups that put the most kilometers on the road every day. The first wall comes for delivery and aggregator fleets. Delivery and ride healing vehicles like Zomato scooters or Uber cabs clock far more kilometers per day than a personal car or scooter. A delivery rider might do 80 to 100 kilometer a day while a personal commuter might do 15. Even a small fleet in emissions terms punches above its weight. So the policy essentially bars any standard petrol or diesel vehicles to be inducted into existing fleets be it two-wheelers, light commercial vehicles or N1 goods carriers. A small exception was made for the BS6 category of two wheelers. Then the policy moves to three-wheelers. Starting 2027, three-wheeler registration in Delhi becomes effectively EV only and this deadline directly impacts Delhi’s auto rickshaw drivers. The CNG Auto, which itself was once the clean alternative to the diesel 3-wheeler, will have to begin its exit from new registrations. Existing CG autos, though, don’t have to come off the road overnight. And then the policy targets everyday commute. Starting April 2028, only electric two-wheelers can be newly registered in Delhi. Now, two wheelers form the largest chunk of Delhi’s total vehicle stock at 67%. They are the default mode of transport for millions of middle-class commuters, students, and small business owners. Banning new petrol two-wheeler registrations is, in scale terms, the boldest bet the policy makes. Now, to be clear, none of these deadlines force people to scrap their existing vehicles. If, for instance, you already own a petrol scooty, you keep it. But if you’re buying new after these dates, electric is your only option. Now the draft doesn’t just set deadlines though. It tries to shape how and when people switch, who switches first and what they switch out of. For instance, take how the purchase subsidies are designed. For electric two wheelers priced under Rs 2.25 lakh, the incentive falls sharply over 3 years. Rups 10,000 per kowatt are capped at rs 30,000 in year 1, dropping to rs 6,600 in year 2 and rs 3,300 in year 3. The path is deliberately structured in a way to not be gradual but more sudden. The message to consumers is to switch early or pay a dearer price later. A similar logic repeats across segments. Electric three-wheelers for instance get rupes 50,000 in year 1 tapering to rupes 30,000 by year three. Goods carriers see the highest support up to rupees 1 lakh in the first year. The draft even targets school buses. Vehicles that run the most kilometers clearly get steeper slopes. And then comes the second layer, scrapage, which also provides a sweetener but with some tight strings attached. So if you scrap a BS4 or older vehicle at an authorized facility, you get an additional incentive. Rups 10,000 for two wheelers, Rs. 25,000 for three-wheelers, Rs. 50,000 for goods vehicles and so on. But the benefit is heavily conditioned with three criteria. One, you will compulsorily need a certificate of deposit from the scrapper without which you won’t receive any incentive. Two, you must buy the new EV within 6 months of that. And three, the payment only goes to the registered owner via direct benefit transfer. Now, put together, the financial design does three things at once. It pulls demand forward through tapering subsidies, targets high impact segments where emissions reductions are largest, and uses scrapage to make holding on to older vehicles economically irrational. Beyond subsidies, the draft proposes a 100% exemption on road tax and registration fees for all electric vehicles registered during the policy period, but with an important limit for cars. Electric cars priced up to rupees 30 lakh x showroom get the full waiver until March 31st, 2030. Above that, you pay full tax. In effect, this ensures that the subsidy primarily goes to middle-class buyers and not to the luxury segment. Now, there’s also a notable addition for strong hybrids, vehicles that combine a petrol engine with an electric motor and can run short distances on battery alone. The draft proposes a 50% reduction in road tax and registration fees for strong hybrid cars priced under rupees 30 lakh. Now, this elaborate carrot stick approach will only work if people can actually charge their EVs. The fear that you’ll run out of battery with no charger in sight is still a major barrier to EV adoption in India. The draft is cognizant of this and does try to tackle it. Now, one of the most notable requirements in the policy is that every OEM operating in Delhi must ensure at least one public EV charging station per dealer and there’s a minimum of three charging points for two and three wheelers and two charging points for four wheelers. Dealerships are already spread across the city and are natural places for people to stop and charge. And this puts the owners on OEMs and dealers to be part of the solution, not just sellers of vehicles. Now, beyond dealerships, the draft requires that all new civil infrastructure projects under the Delhi NCR government must be EV charging ready with adequate electrical capacity to enable charger installation and land owning agencies must periodically identify land parcels for charging and swapping deployment. The 2020 policy had already required that 20% of parking capacity in new buildings be EV ready. The 2026 draft expands this to government infrastructure across the board. So on the coordination side, the draft assigns Delhi Transco Limited or DTL as the nodal agency for the entire public charging and swapping network. It’s tasked with assessing current and future EV charging load and coordinating power procurement with the power discoms. But hardware and coordination are only part of the puzzle. The grid itself needs to be ready. If hundreds of thousands of EVs plug in every evening after work, that’s a spike in demand right when the grid is already under pressure. So to address that, the Ministry of Power’s 2024 EV charging guidelines encourage charging during solar hours. After all, charging at 2 p.m. when solar generation is flooding the grid should cost less than charging at 8:00 p.m. when everyone’s running their ACs. The Cent’s amendments to the electricity rights of consumers rules introduced time of day tariffs. Electricity during solar hours should be 10 to 20% cheaper while PAR rates should be 10 to 20% higher. Delhi’s regulator DERC has already engaged with DoD structures. For apartment dwellers though the picture is more complicated. Delhi’s 2020 policy pushed for discom facilitated installation of private charging points and the switch Delhi portal runs a single window process for charger installation. But installing a home charger can mean upgrading your household’s sanctioned electrical load, coordinating with a discom approved vendor, and maybe even setting up a separate meter. Each step adds time, cost, and uncertainty. And on top of that, in apartment complexes, parking and wiring are usually shared, and decisions on shared infrastructure are often controlled by RWAs. So, who pays for the wiring upgrade, and where does the charger go? Can others use it? And what happens if the RWA refuses permission? These are conflicts that the policy is yet to address. Now, as of March 2026, Delhi has over 3,100 charging stations and 893 battery swapping stations. A 2022 charging action plan had targeted 18,000 charging points by 2024. By their own admission, they’re quite far behind. Delhi’s draft EV policy 2.0 is at its core a bet that a mixture of reward and punishment can do what incentives alone couldn’t. That could be a highly welcome approach, but its success will depend on a lot more than just a shift in framework. And what also matters is whether chargers show up where people actually park, whether the grid can handle the load and whether supply keeps pace with the demand the mandates will create. If Delhi pulls it off, it could become the template for other Indian cities. And it’s already one of the leading adopters of EVs in India. If it doesn’t, the lesson is just as clear. Mandates without matching infrastructure are just deadlines that get pushed. For all the sources mentioned in this video, don’t forget to check out our newsletter. The link is in the description. Coming to the second story. So, two rating agencies Chrysle and Carage released reports this week about India’s securitization market. Those reports are filled with terms that if you saw them in a headline would probably make you scroll right past. Pass through certificates, direct assignments, assetbacked securitization, mortgage back securitization, priority sector lending certificates. We came across a similarly cryptic crystal headline last year at the same time about arcs and security receipts and spent a whole piece decoding it. This time we want to do the same thing. We’ll start from the very basics of what securitization actually is, what all these acronyms mean, why they exist, and then get into what these reports are actually telling us about the health of Indian lending. So here’s a simple way to think about what it means to securitize a loan. Say an NBFC, let’s call it quick lend, has given out 10,000 vehicle loans, each worth about rupes 5 lakh. That’s rups 500 cr of loans sitting on its books each of which will be repaid through monthly EMIs over the next 5 years. Quick lend has an asset the right to receive those future EMIs. But it doesn’t have cash today and it needs cash today because it wants to lend more. So Quick Lend does something clever. It takes those 10,000 loans, bundles them into a pool and sells that pool to investors. Now the total EMIs that will flow in over 5 years add up to more than rupees 500 cr because borrowers are paying interest on top of principle but investors aren’t going to pay the full future value upfront. They’re taking on the risk of some borrowers potentially defaulting plus the money comes in over years rather than immediately. So they pay quick lend a discounted upfront amount say rups 480 cr and in return they get the right to collect those emis over the next 5 years. That gap between what they pay now and what they collect over time is their return. Quick lend gets its cash. The investors get a stream of repayments that should earn them a decent yield and everybody’s happy. That’s securitization. You’re taking a pool of loans and turning it into something that can be bought and sold. You’re making it into a security, hence the name. In India, there are two ways securitization works. The first route is a pass through certificate or PTC. So here Quickland transfers its piece 500 cr vehicle loan pool to a separate trust called a special purpose entity or SPE. This SPE is legally ring fenced from Quickland’s business and it issues securities in the form of PTCs to investors. But not all investors want the same deal. Some want safety above all else and are okay with lower returns as long as they get paid. Others are willing to take more risk if the reward is higher. So the trust doesn’t issue one single security but it does so in tanches. So think of a tanch like a building with floors. The top floor, the senior tanch gets paid first from the EMI collections that flow in every month. As long as the pool performs even moderately well, these investors get their money. The ground floor, the junior or equity tanch gets paid last after everyone above has been taken care of. But it also earns the highest return. If defaults arise, the losses eat into the ground floor first. Now on top of this, the trust holds a cash buffer which is a fixed deposit that acts as a cushion and the loan pool is deliberately made larger than the securities issued against it. So remember quick lends rups 500 cr vehicle loan pool. The trust might issue only rupees 450 cr worth of ptcs against it and that extra rupees 50 cr of loans is called over collateralization. It means that even if a bunch of borrowers stop paying, the remaining pool is still large enough to cover what investors are owed. So all of these protections together, the tranching, the cash buffer, the overcolateralization are collectively called credit enhancements. Now the second simpler route is a direct assessment or DA. Quick lends the pool directly to a buyer, almost always a bank with no credit enhancements. The bank takes the loans onto its own books and bears the full credit risk. The RBI actually prohibits credit enhancements in DAS. They’re cheaper and faster to execute, which is why they’ve historically been popular. But because there’s no structural protection, only RBI regulated entities like banks can be buyers. Now, in both cases, the original lender keeps collecting the EMIs and earns a servicing fee, while the borrower usually doesn’t even know the loan has changed hands. In FY26, PTC’s accounted for roughly 60% of all securitization transactions, an all-time high, and DA is made up the remaining 40%. We’ll come back to why PTCs are gaining ground. Now, everything we just described applies to borrowers who are paying their EMIs on time. Securitization is a funding tool for good loans. But what happens when loans go bad and the loan becomes a non-performing asset or NPA? That’s a different market. entirely and one we covered in detail last year. So when loans go bad, banks sell them to asset reconstruction companies or ARC’s which issue security receipts or SRs. They represent the bank’s ongoing stake in whatever the ARC manages to recover. And unlike securitization where investors are buying a stream of healthy EMIs, SRs are a bet on whether a troubled borrower’s assets can be liquidated for anything at all. So think of it this way. Securitization PTCs and DAS is for good loans being sold for funding. Security receipts are for bad loans being sold for recovery. Same principle, loans being transferred from one entity to another, but entirely different risk profiles and buyers. So, if some of this sounded familiar, it’s probably because you saw a movie called The Big Shot. A’s zero, B’s zero, double B’s zero, triple B’s zero,

and then that happens. What is that? That’s America’s housing market. Now, this movie was about one of the causes of the 2008 global financial crisis. American banks made terrible mortgage loans to people who couldn’t afford them, packaged those loans into securities, and then did something truly reckless. They resecurized those securities. They took pools of mortgaged back securities, which were already a pool of loans, and bundled those into new instruments called collateralized debt obligations or CDOS. And that’s not all. They created CDOS of CDOS’s and then added more layers of securitization that we won’t go into the details of here. Now, the RBI looked at that catastrophe and drew a hard line banning resecurization as well as synthetic securitization. Only simple pass through securitization of actual performing loans is allowed. The originator must hold the loans for a minimum period before selling them 3 to 6 months depending on the tenure and must retain at least 5 to 10% of the pool ensuring they have skin in the game. The result is a market that deals in straightforward granular retail loans, vehicle EMIs, gold loan repayments, micro finance installments rather than the multi-layered opaque structures that added fuel to the fire that was a global financial system. So now that we have the vocabulary, let’s get into what Crystal and Carage are saying. So India’s securitization market hit an all-time high of approximately rupes 2.55 lakh cr in FY26. For context, this market was rupees 1.13 lakh cr just 4 years ago in FY22. It’s more than doubled. But the headline number matters less than what’s underneath it. And three shifts stand out. First, NBFCs have taken over the market. NBFC originated deals accounted for 97% of all securitization in FY26, up from 74% the year before. Bank organizations collapsed from 26% to just 3% and this was overwhelmingly driven by one institution, HDFC Bank, which had aggressively securitized loans in FY25 to manage its post merger balance sheet. That’s when it had absorbed huge amounts of advances but little to no deposits from HDFC causing the credit deposit ratio to spike. So HDFC started to securitize its book to release some funds and once its credit deposit ratio normalized, it pulled back almost entirely and no other bank filled the gap. For NBFCs, securitization is how they fund themselves. And unlike banks, they can’t mostly take cheap deposits. They borrow from banks in capital markets at 1 to 3ear tenurs, but lend at 5 to 7 years or longer for housing. Securitization solves this mismatch by converting future loan repayments into upfront cash. So when the RBI raised risk weights on bank lending to NBFCs in November 2023, making bank credit more expensive, securitization became even more critical. Second, gold loan securitization came out of nowhere. In FY25, gold loan back deals were barely a blip. But in FY26, they surged to 15% of the market, becoming the second largest asset class behind vehicle loans. Gold loan disbbursements had been rising sharply, up 94% year-on-year in Q3 FY26 alone, driven by rising gold prices and tighter unsecured lending norms. For investors, gold loan pools are close to ideal. The collateral is liquid, easily valued, and physically held by the lender. Loan tenurs are typically under 12 months. So if a borrower defaults, the lender auctions the gold and recovery is near certain. These pools don’t even need PTC’s. Most gold loan securitization happens through the simpler DA route because the collateral itself is protection enough. Third, micro finance or MFI investors demanded structural armor. So MFI loans had held steady at approximately 12% of the market. But how they were securitized changed dramatically. The share of MFI deals going through the BTC route jumped from 30% to 69% in a single year. That’s because the sector had just come off its worst asset quality cycle in years. Gross NPA roughly doubled across the industry in FY25 and investors who had been comfortable buying MFI pools through simple DAS got burned. They didn’t ever stop buying either but they now demand the credit enhancements that PTC’s provide. Investors want to stay but on different terms. Now if NBFCs are selling these loan pools, who’s buying them? That’s mostly banks and not entirely voluntarily. See, the RBI requires all commercial banks to lend 40% of their credit to priority sectors like agriculture, MSMES, housing, etc. Miss the target and you must spark the shortfall in a fund at Nabad, earning returns that are below market lending rates. The problem is that priority sector borrowers are exactly the customers NBFCs reach well and banks don’t. So banks buy securitized pools of these loans from NBFCs getting both a performing asset and meeting the priority sector criteria. But there’s another way to do that. Priority sector lending certificates or PSLC’s. So if bank A has excess agricultural lending and bank B is short, bank B buys a PSLC from bank A. There’s no transfer of assets or loans. Bank B just gets the PSL tag for that year. But you might ask, why would a bank buy a securitized pool when it could just buy a PSLC? So a PSLC is a pure expense. You pay a fee and get nothing but compliance. A securitized pool, meanwhile, also gives you a decent yield along with compliance. So for a bank with surplus liquidity, it’s an obviously better deal. Securitization data is in a sense a health monitor for India’s credit plumbing. When volumes rise sharply, it can mean NBFCs are being squeezed on other funding channels. And when investors shift from DAS to PTC’s, it means they’re nervous about asset quality. When gold loan pools surge, it tells you something about how households are borrowing. And when bank originations collapse because one institution pulls back, it tells you the market is still dangerously concentrated. The FY26 numbers tell us that India’s securitization market is maturing. The originator base broadened from 175 to over 190 entities with the top 20 share falling from 71% to 65%. The market is learning to price risk more intelligently demanding structural protection where asset quality is uncertain and staying simpler where collateral is strong. NBFCs have permanently absorbed securitization into their business as usual operations. India has built a rupees 2.55 lakh crore loan bazar with strong guardrails and few glaring systemic risks. The question now is whether it can build the depth and liquidity to match the ambition. Now coming to the tidbits, India’s unemployment hit a 5-month high of 5.1% in March as per pls. Urban areas experienced a notable increase in joblessness contributing to the rise in the overall unemployment figure. Women continue to face greater unemployment challenges than men while the youth demographic also showed a troubling uptick in joblessness. Coming to the next tidbit, the 2026 summers are set to beat the heat record of 2024. The India Meteorological Department or IMD has issued official heatwave warnings for isolated pockets in central and eastern India starting midappril 2026. Coming to the final tidbit, Ohio based defense manufacturer GE Aerospace and India’s state-owned Hindustan Aeronautics Limited have reached an agreement on technical matters for co-production of F414 engines, the two companies said in a joint statement issued earlier this week. The deal has been in the works for about 3 years and brings the partners closer to production. That’s all the news I have for you. Thank you so much for watching and see you in the next one. Disclaimer, this content is forformational purposes only. None of the stocks, brands, or products mentioned are recommendations or endorsements.