RBI launches co-lending scheme for banks, NBFCs
It is aimed at improving flow of credit to unserved, underserved
Mumbai : The Reserve Bank on Thursday came out with a Co-Lending Model (CLM) scheme under which banks can provide loans along with NBFCs to priority sector borrowers based on a prior agreement.
The CLM, which is an improvement over the co-origination of loan scheme announced by the RBI in September 2018, seeks to provide greater flexibility to the lending institutions, the Reserve Bank of India (RBI) said in a release.
Under the CLM, banks will be permitted to co-lend with all registered NBFCs (including HFCs) based on a prior agreement, RBI said, adding that "the co-lending banks will take their share of the individual loans on a back-to-back basis in their books". "However, NBFCs shall be required to retain a minimum of 20 per cent share of the individual loans on their books."
The primary focus of the scheme, rechristened as "Co-Lending Model" (CLM), is to improve the flow of credit to the unserved and underserved sector of the economy and make available funds to the ultimate beneficiary at an affordable cost, considering the lower cost of funds from banks and greater reach of the NBFCs, it added.