On March 10, 2021, Karur Vysya Bank(KVB)and Cholamandalam Investment and Finance Company Limited (Chola), the financial services arm of the Murugappa Group launched their co-lending business partnership to make new customers all over India with technology from Nucleus Software.
Objective of the co-lending:
- To lower the cost of capital and open new markets by enabling new loans at finer rates.
- Using technology to enable seamless integration with multiple partner banks.
- Chola will offer KVB to reach new customers by targeting high-value loan segments such as construction equipment and commercial vehicles.
Co-Lending Model (CLM):
Aim:
To improve the flow of credit to the unserved and underserved sector of the economy and make available funds at an affordable cost.
Introduced:
On November 5, 2020, the Reserve Bank of India (RBI)announced this scheme, under which banks will be permitted to co-lend with all registered NBFCs (including HFCs) based on a prior agreement.
Benefits:
- NBFCs shall be required to retain a minimum of 20% share of the individual loans
- It will not apply to foreign banks with less than 20 branches.
- It enables banks to meet their priority sector lending target.
Recent Related News:
On February 8, 2021, Bank of Maharashtra(BoM) entered into a co-lending agreement with Non-Banking Financial Company (NBFC), LoanTap Credit Products to extend credit to Micro, Small and Medium Enterprise(MSME) loans.
About Cholamandalam Investment and Finance Company Ltd (Chola):
Establishment– 1978
Company Location – Chennai, Tamilnadu
Chairman – Vellayan Subbiah
About Karur Vysya Bank (KVB):
Establishment– 1916
Headquarters– Karur, Tamil Nadu.
Managing Director (MD) and Chief Executive Officer (CEO)- B Ramesh Babu
Tagline – Smart Way to Bank
