Colending to be extended to all regulated entities
Business Standard [
Mumbai
]
Apr 10, 2025 | Page No.: 5 | Position: Bottom Left | Source: Anupreksha Jain | Sq Cm: 140 | AVE: 70067 | PR Value: 350335
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FRESH AVENUES Colending to be extended to all regulated entities ANUPREKSHA JAIN Mumbai 9 April All regulated entities can now take part in colending whose scope will extend beyond seg- ments covered under priority- sector lending PSL accord- ing to the Reserve Bank of India RBI Banks can enter into such arrangements with one another Banks can now enter into and not just with non-banking colending arrangements financial companies NBFCs with each other Similarly an NBFC can do colending with another NBFC arrangement the borrower got This move is expected to the benefit of lower interest enhance the flow of credit to rates as banks received funds underserved segments such at lower rates and NBFCs com- as micro small and medium pensated for the rest So it is a enterprises MSMEs and win-win for banks and NBFCs ensure stronger customer pro- Kirti Timmanagoudar tection experts said head of strategy co-lending However experts high- IIFL Finance said Small lighted the process of forming NBFCs that were not able to partnerships and executing come into a pact with banks colending agreements was can now easily do so starting lengthy which may be a chal- with a large NBFC as step 1 and lenge Additionally regulated then with banks In a nutshell entities have to share risks of a it is a positive move and will client defaulting on payment help underserved customers therefore posing an additional Colending allows regulated burden on banks and NBFCs entities to jointly fund a loan colending arrangements portfolio in a ratio agreed have helped in PSL Now we upon involving revenue and are expanding to other seg- risk sharing with or without ments outside PSL as well sourcing and management Currently it was the bank and arrangements the NBFCs who could enter According to the RBI s into this arrangement Now revised guidelines if any reg- two banks can enter into this ulated entity declares a client arrangement as well said RBI a non-performing asset it will Governor Sanjay Malhotra be classified accordingly for all adding that under this other regulated entities