Credit and finance for MSMEs: Co-lending marketplace Yubi Co.Lend on Tuesday said it has recorded over 3.5 million transactions in the financial year 2022-23 with 375 per cent year-on-year (YoY) growth in its gross transaction value and 250 per cent in volume. Secured SME loans and unsecured SME loans grew by 290 per cent and 158 per cent respectively in Q4 as compared to Q3 FY23. Co-lending as a model has gained momentum in the country as it allows banks to diversify their portfolios, and non-banking financial companies (NBFCs) to access cheaper funding sources leading to lower risk exposure and eventually reduced cost of funds.
The total co-lending portfolio declared by public sector banks for FY23-FY24 is Rs 25,414 crore, with the State Bank of India (SBI) accounting for the bulk, Yubi said in a statement. It noted that 16 co-lending partnerships were announced by various banks and NBFCs in the second half of FY23 alone.
Also read: Co-lending pacts between NBFCs gaining traction
Gaurav Kumar, Founder & CEO at Yubi said the issue of the credit gap in the MSME sector can be addressed through co-lending models. “In the dynamic economic environment with rising inflation and recessionary pressures, the dual ability of the co-lending model acts as a hedge for large financial institutions as it increases credit leverage and decreases credit risk,” he said.
The company currently has more than 500 co-lending partners, over 50 lenders, and records 1 lakh average daily transactions. Out of total co-lending transactions in India, according to the data recorded by Yubi, consumer loans (44.6 per cent) and secured SME loans (35 per cent) were the top asset classes for co-lending in India in Q4 FY23, indicating high demand for financing from consumers and small businesses.
Also read: How co-lending is changing the way public sector banks lend
Maharashtra, New Delhi, Karnataka, and Uttar Pradesh were the top states in co-lending transactions in Q4 FY23.
Co-lending as a model benefits both parties wherein relatively smaller NBFCs, which usually operate in remote geographies, can increase their business footprints and income by leveraging the balance sheet strength of banks. On the other hand, banks, through the risk and reward sharing model, are able to extend their geographical reach and fulfil their priority sector lending obligations.
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