Non-banking financial companies (NBFCs) are tying up with banks under RBI’s loan co-origination scheme. The scheme was launched in August 2018.
The number of NBFCs partnering with banks is on the rise of late as illiquidity has forced these NBFCs to explore economical ways to raise funds.
The industry experts feel that loans worth Rs 10,000 crore may have been issued under the new scheme since its launch in August 2018.
As per the loan co-origination scheme, the collaboration between the two lenders (NBFC and bank) is such that the loans would originate from the NBFC with an exposure of at least 20% and the bank would fund the remaining amount at a pre-agreed lending rate.
RBI issued a circular which said that the interest rate levied on the end borrower is based on the respective interest rates and proportion of the risk shared by both NBFC and bank.
Under co-originated loan scheme, the rate of interest on loans issued by NBFCs is much lower than a typical NBFC loan.
Large NBFCs have not considered tying up with banks for co-originated loans while the small and mid-cap NBFCs are proactively approaching banks for the collaboration deal.