Finance Ministry directs SBI to form Committee to Tackle Co-Lending Issues

SBI - SBI to form Committee to Tackle Co-Lending Issues - Finance Ministry directs SBI - Finance Ministry - SBI news - Taxscan

The Finance Ministry has recently asked the State Bank of India ( SBI ) to set up a committee to address issues related to the co-lending business model, said a senior government official who does not wish to be named.

The Reserve Bank of India recently allowed banks to co-lend or co-originate loans with non-banking finance companies, including housing finance companies, to enhance the flow of credit to the unserved and underserved sections of the economy. Non-banking finance companies can take a maximum of 20 per cent, according to the norms.

“We’ve identified some co-lending issues and thus asked SBI to form a committee. This committee will include representatives from major banks and non-banking financial services. The committee will also look at why banks are hesitating to enter the co-lending space. This will also create common ground for both banks and non-banking finance companies. The 80 per cent money comes from banks and 20 per cent from non-banking finance companies. So banks have suggested to us to provide first loss cover, which will ease the banks in this space,” An Official from the Finance Ministry said.

CRISIL Ratings predicts that the co-lending book of non-banking financial companies will likely reach Rs 1 trillion by June 2024, with a growth rate of 35-40 per cent annually over the medium term. During the meeting, the Finance Ministry took suggestions from the stakeholders for the upcoming budget and the 100-day agenda as well.

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