Outstanding advances under co-lending arrangement by public sector banks (PSBs) have increased over 7x from Rs 1,618.23 crore in March 2022 to Rs 11,497.14 crore in March 2024 under the agriculture and MSME segments, according to the data shared by Pankaj Chaudhary, Minister of State in the Finance Ministry in a written reply to a question in the Lok Sabha on Monday.
Reserve Bank of India (RBI) in 2020 had permitted scheduled commercial banks (SCBs) to co-lend with all registered non-banking financial companies (NBFCs) including housing finance companies (HFCs) to improve the flow of credit to unserved and underserved priority sectors.
Further, the central bank had also instructed banks and NBFCs to formulate policies for entering into co-lending arrangement and enter into a master agreement to include terms and conditions of the arrangement, the criteria for selecting partner institutions, the specific product lines, areas of operation, and more.
India’s MSME loan portfolio increased by 17.8 per cent to Rs 64.1 lakh crore as of March 2024 from the year-ago period, according to a report by credit bureau CRIF High Mark September this year. MSME loans included loans to entities with aggregate credit exposure of up to Rs 50 crore and self-employed individuals.
Meanwhile, co-lending AUM of NBFCs was nearing around Rs 1 lakh crore after over five years since the model came into being, CRISIL Ratings said in a report in April this year.
Of the overall co-lending book, personal loans alone accounted for about a third of the AUM, followed by housing loans at around 20 per cent and unsecured MSME loans and gold loans each making up around 13 per cent of the pie. Secured MSME (including loan against property) and vehicle loans comprise the rest ~20 per cent, according to the report.