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):
To improve the flow of credit to the unserved and underserved sector of the economy and make available funds at an affordable cost.
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.
- 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):
Company Location – Chennai, Tamilnadu
Chairman – Vellayan Subbiah
About Karur Vysya Bank (KVB):
Headquarters– Karur, Tamil Nadu.
Managing Director (MD) and Chief Executive Officer (CEO)- B Ramesh Babu
Tagline – Smart Way to Bank