On January 16, 2021 IIFL Home Finance Ltd and Standard Chartered Bank entered into a co-lending arrangement to extend credit to MSME loans (loan against property).
- It is to be noted that this is one of the 1st co-lending arrangements in industry after Reserve Bank of India(RBI) launched Co-Lending Model (CLM).
Provisions of Partnership:
Following are the provisions of the partnership:
- IIFL Home Finance Ltd and Standard Chartered Bank will co-originate MSME loans
- IIFL Home Finance Ltd will provide services to the customers throughout the entire loan life-cycle including sourcing, documentation, collection and loan servicing.
Gist about Co-Lending Model (CLM):
i.Launch
RBI revised the loan scheme of the Co-origination Model between Banks and Non-Banking Financial Companies – Non-Deposit taking – Systemically Important (NBFC-ND-SIs) launched in September 2018 and renamed as Co-Lending Model (CLM)
ii.Purpose of Revision
The revision was done to provide greater operational flexibility to the lending institutions
iii.Aim of CLM
To enhance the credit flow to the unserved and underserved sector of the economy and make available funds to the ultimate beneficiary at an affordable cost
iv.Highlights
Co-Lend
- Under CLM, banks can co-lend with all registered Non-Banking Financial Companies(NBFCs) including Housing Finance Companies(HFCs) to priority sector borrowers based on a prior agreement.
Shares
- NBFCs– Required to retain a minimum of 20% share of the individual loans on their books.
- Co-lending banks– Take their individual loan share on a back-to-back basis in their books.
What is co-origination?
As per RBI, co-origination is a ‘joint contribution of credit by both lenders’, where risks and rewards are shared between the banks and NBFCs.
Recent Related News:
On December 19, 2020, IIFL (formerly India Infoline Limited) Home Finance Ltd, the subsidiary of IIFL Finance has joined hands with ICICI (Industrial Credit and Investment Corporation of India) Bank for sourcing and servicing arrangement to provide affordable housing and MSME (Micro, Small and Medium Enterprises) loans.
About IIFL Home Finance Ltd:
IIFL(formerly India Infoline Limited) Home Finance Ltd is a subsidiary of IIFL Finance Limited. IIFL Finance Limited was formerly known as IIFL Holdings Limited
Headquarters– Gurgaon, Haryana
Incorporated under– Companies Act, 1956
Executive Director & CEO– Monu Ratra
About Standard Chartered Bank:
It is an indirect subsidiary of Standard Chartered PLC
Headquarters– London, United Kingdom(UK)
Chief Executive– Bill Winters, CBE(Group Chief Executive of Standard Chartered PLC)
