RBI News Update : RBI extends ‘co-origination’ model of loans to all NBFCs

RBI extends ‘co-origination’ model of loans to all NBFCs

Mumbai, Oct 9 : The Reserve Bank of India (RBI) has extend the ‘co-origination’ model of lending to all non-banking financial companies (NBFC), including housing finance companies (HFC), to make all priority sector loans eligible for the scheme and give greater operational flexibility to the lending institutions.

RBI had, in 2018, put in place a framework for co-origination of loans by banks and a category of NBFCs for lending to the priority sector subject to certain conditions. The arrangement entailed joint contribution of credit at the facility level, by both the lenders as also sharing of risks and rewards between them for ensuring appropriate alignment of respective business objectives.

“Based on the feedback received from stakeholders, it has been decided to extend the scheme to all NBFCs, including HFCs, in respect of all eligible priority sector loans, and allow greater operational flexibility to the lending institutions,” said the RBI Governor Shaktikanta Das on Friday.

The decision has been taken to better leverage the respective comparative advantages of the banks and NBFCs in a collaborative effort, and to improve the flow of credit to the unserved and underserved sector of the economy.

The borrowers under the scheme would require conforming to the regulatory guidelines on outsourcing, KYC, among others.

The proposed framework will be called the “Co-Lending Model”. The revised guidelines will be issued by the end of October.

IANS

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