State Bank of India is expected to launch a co- lending business model soon along with 4 to 5 medium to large sized NBFCs. There are some obstacles at present relating to the integration of technology with the NBFCs but once they are solved, the program would be launched soon and it would be completely automated. It will have no manual intervention from bringing on customers on board and to disbursing loans and monitoring the process, as was said by an SBI official.
Under the co- lending model, the bank will have an exposure somewhere between 70 to 80% and the NBFCs will have the rest of the shares. However, this understanding will only be for the priority sector lending. According to the Deputy Director of SBI, the bank was close to the launch of the co- lending financial model with the NBFCs, in keeping with the regulations of the Reserve Bank of India and there will be a tie up with four to five NBFCs, mostly medium and large sized and everything would be finalized in 30 to 40 days.
More details worth noting
It has been about 12 months since the RBI had formed the framework for the co- origination of the loans made by banks and NBFCs in the priority sector and this is a new system that was launched by the Central Bank after the liquidity crisis at the NBFCs so that credit flow could be directed towards the productive sectors.
The authorized officials are on the lookout for tie ups with NBFCs and the lenders are weighing whether the NBFCs have a proper business model in place and the required technology. The entire process of the co- lending business model from taking business proposal to disbursement will be automatic. The much needed integration between banks and NBFCs is finally underway and it would also assist the banks to meet the requirements of the priority sector lending target. In case this co-lending system extends to affordable housing, it may be a big boost for the sector at a time when it is facing a liquidity crunch.