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RBI finalising co-origination lending guidelines: Dy Gov S S Mundra

He said consultations have already taken place with the banking industry on this issue

Press Trust of India  |  New Delhi 

RBI Deputy Governer S S Mundra
RBI Deputy Governer S S Mundra

In order to strengthen credit flow to small businesses, the is finalising guidelines for co-origination lending mechanism, Deputy Governor said on Friday.

In the co-origination model not only fund micro institutions (MFIs) or non-banking companies (NBFCs) "for on-lending to ultimate borrowers, rather both of them provide loan at the borrower levels and share the loan amount at agreed percentage", Mundra said.

The advantage this can bring is the strength of two sectors together, he said, adding that the MFIs have better understanding at the ground level because they are available at last mile and can supplement their resources.

"To my mind, rather than simply going for re-financing or onlending, this co-origination can become an important bridge for catering to the sector," he said.

Mundra further said that consultations and discussions have already taken place with the banking industry on this issue.

"It is something (guidelines) which is in making. The idea is it can be an alliance of people in lending sector," he said.

On (TReDS), Mundra said three entities were given permission for setting up platform for trade discounting.

One has already started operation and other two would also start operation very shortly, he said.

TReDS, an automated system driven platform is expected to benefit MSMEs by facilitating them to auction their trade receivables at competitive market rates through transparent bidding process on the platform by multiple financiers.

The TReDS will be the first attempt in the country to introduce factoring without recourse and help not only quick realisation of receivables but also appropriate price discovery.

First Published: Fri, June 16 2017. 18:23 IST
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