Colending yet to take off over 'multiple issues': Experts
Business Standard|July 01, 2024
The bank-NBFC (non-banking financial company) colending model, introduced by the Reserve Bank of India (RBI) in 2018, is yet to take off fully due to multiple issues, said industry players.
AATHIRA VARIER
Colending yet to take off over 'multiple issues': Experts

The reasons include lack of technological integration, different risk perceptions on the part of lending partners (banks and NBFCs), and bigger NBFCs being slow in accepting the model, said experts. Colending happens when multiple lending partners enter into an arrangement to provide loans to priority sectors like micro, small, and medium enterprises (MSMEs).

In colending, the RBI-mandated minimum 20 per cent credit risk by way of direct exposure will be on the NBFC's books till maturity and the balance will be on the bank's books.

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