India’s largest lender, State Bank of India (SBI) has partnered with ECL Finance, a subsidiary of non-banking finance company (NBFC) Edelweiss Financial Services, on Thursday for priority sector lending towards micro,small and medium enterprises (MSMEs) for business loans ranging from Rs 3-50 lakh.
Edelweiss had earlier partnered with public-sector lenders, Central Bank of India and Bank of Baroda to co-lend to MSME customers. The partnerships follow after the Reserve Bank of India (RBI) updated norms in August, allowing co-lending by banks and NBFCs towards the MSME, agriculture and housing sector to be considered as priority sector loans.
For Edelweiss, the partnership with SBI which brings with it low-cost capital would create an alternate model for disbursals, which is asset light and would create a strong revenue model through fee-income. “For MSMEs, we believe that revival is possible only by making credit available to this vital contributor of the Indian economy. Edelweiss and SBI are collaborating to make reasonably priced credit accessible for the priority sector segment,’’ said Rashesh Shah, chairman & CEO, Edelweiss Group.
P K Gupta, MD (Digital & Retail Banking), SBI said, “The partnership will boost credit availability to the MSME community, which contributes substantially to the GDP. The wide reach of SBI will give access to cost effective loans to the MSME sector in non-metros.”