RBI allows all NBFCs to co-lend with banks under revised guidelines

Earlier, banks were only allowed to co-originate loans with non-deposit taking systemically important finance companies

The Reserve Bank of India (RBI) on Thursday allowed banks to co-lend with all registered non-banking finance companies (NBFCs), which include housing finance companies, to improve the credit flow to unserved and under-served sectors of the economy.

Earlier, banks were allowed to co-originate loans with ‘systemically important non-deposit taking finance companies’. This has now been revised by the central bank to provide greater operational flexibility to the institutions when it comes to lending to the priority sectors.

Under the co-lending model, banks have to take their share of the individual loans on a back-to-back basis on their books while NBFCs are required