RBI's new risk-weight rules likely to spur co-lending by banks, NBFCs

The RBI recently decided to revise the risk weight norms for NBFCs to 125 per cent from 100 per cent

Co-lending deals between non-banking financial companies (NBFCs) and banks are likely to rise after the Reserve Bank of India’s (RBI’s) decision to increase the risk weight on consumer credit, industry leaders and experts say. Smaller NBFCs, they add, may increasingly opt for co-lending as capital markets could become costlier for them.

“Smaller NBFCs will be more comfortable with co-lending because they are geography-specific in terms of industry or customers. Since they will have that specialisation and total localisation, they will prefer to do co-lending more aggressively. The larger players are also likely to participate, but they may not be that aggressive,”