NBFCs AND CO-LENDING MODEL: A BOON OR A BANE?
- Credit Rating Agency in India
- Industry Report
- NBFCs AND CO-LENDING MODEL: A BOON OR A BANE?
In a press release, dated 1st August 2018, issued by the reserve bank of India (RBI), namely, ‘Statement on Developmental and Regulatory Policies’, a co-origination model was introduced for banks and NBFCs. This was done to provide an edge to the credit model provided to the high-risk priority sector industries, i.e., agriculture, export credit, social infrastructure, renewable energy, housing, education and MSMEs. “It was decided that all scheduled commercial banks (excluding Regional Rural Banks and Small Finance Banks) may co-originate loans with Non-Banking Financial Companies - Non-Deposit taking- Systemically Important (NBFC-ND-SIs), for the creation of eligible priority sector assets. The co-origination arrangement should entail joint contribution of credit by both lenders at the facility level.