co lending presentation

What is Co Lending: the Ultimate Guide

Table of Contents

What is Co Lending?

Co lending is an arrangement where multiple lenders partner to provide loans to borrowers. This helps increase lending capacity and reduces risk for individual lenders . Each lender sets their own terms and conditions. Co lending is used in various industries like real estate, small business loans, and personal loans.

Key Players in Co Lending

Banks and Non-Banking Financial Companies (NBFCs) form partnerships to provide loans, with banks offering a part of the loan amount and NBFCs contributing the rest. This collaboration allows both parties to share the risk and profit generated from the loan, resulting in a smoother and more streamlined customer experience.

Co lending benefits banks by helping them reach untapped markets and customers , while NBFCs gain access to lower-cost funds, enhancing the overall customer experience – thanks to improved personal touch and better interface.

One notable co lending partnership is between SBFC (Small Business Finance) and ICICI Bank. This partnership allows the two entities to join forces and provide funding to borrowers who may not have been able to secure loans otherwise.

Co Lending Models

Co lending regulations.

Co lending, as a rapidly emerging trend in finance, needs to be regulated by the Reserve Bank of India (RBI) and the Ministry of Finance. To serve this purpose, regulators have issued regulations and guidelines to ensure the safety of borrowers and lenders alike. One such regulation issued by the RBI in November 2020 requires banks to maintain a minimum 20% share of the individual loans co-originated by them with NBFCs to avoid direct exposure to potential concentration risk.

This move was made to mitigate the potential concentration risk that may arise due to the involvement of a large number of NBFCs in co lending arrangements. Additionally, the RBI has mandated that banks must ensure that the NBFC partner complies with all relevant norms and regulations to further minimize direct exposure to risks.

These regulations aim to create a single point of interface between banks and NBFCs, promoting transparency and reducing risks for both parties involved.

Terms & Conditions of Co Lending Arrangement

Co-lending arrangements operate under mutually agreed terms and conditions, including the sharing of credit risk and interest income. The Reserve Bank of India and the Ministry of Finance have issued guidelines to regulate these arrangements, ensuring compliance with regulatory requirements and establishing a framework for seamless collaboration.

The agreement outlines the roles, responsibilities, and liabilities of both the bank and the NBFC , creating a clear understanding of their respective contributions. This tripartite agreement is crucial in facilitating co-lending, allowing banks and NBFCs to jointly contribute credit and provide financial services to underserved customers at an affordable cost.

Co Lending Infrastructure

Co lending in India is supported by a robust infrastructure, including the use of escrow accounts to ensure secure and efficient transactions.

When selecting a co lending partner, it’s crucial to consider factors like reputation, financial stability, and expertise in the target segment. Evaluate their technological capabilities and track record in co lending, as well as their understanding of regulatory requirements, including the use of escrow accounts.

A strong partnership built on trust and effective communication is essential for long-term success.

Learn More about Digital Lending

Advantages and Disadvantages of Co Lending

Co lending in the financial services sector offers numerous advantages to banks, NBFCs, and consumers.

• Co lending presents an opportunity for banks to increase their share of credit to priority sectors.
• By partnering with NBFCs, banks can tap into their expertise and reach in specific market segments.
• Allows banks to benefit from product innovations and lower interest rates, ultimately expanding their loan portfolio.
• Helps banks meet regulatory requirements like priority sector lending norms.
• Enables banks enhance their presence in underserved areas, bridging the credit gap and providing financial services to potential customers.
• NBFCs can leverage their expertise in niche sectors and reach underserved customers
• Partnering with banks grants NBFCs access to lower-cost funds and a wider customer base.
• This enables NBFCs to offer competitive interest rates and customized loan products, enhancing credit flow to priority sectors and supporting financial inclusion initiatives.
• NBFCs can benefit from the technological interventions and digital penetration of their partner banks.
• Co lending arrangements allow NBFCs to maximize their potential customer reach and contribute to filling the credit gap in the market.

To Consumers

• Consumers benefit greatly from this arrangement, particularly underserved customers who may have limited access to credit.
• Access to a wide range of loan products and enjoy competitive interest rates.
• The process is faster, as it reduces the turnaround time for loan approvals and disbursements.
• It also plays a crucial role in ensuring the availability of credit in underserved sectors and rural areas.
• Creates opportunities for small businesses and individuals to access affordable finance.

Applications of Co Lending

Co lending offers a wide range of application and opportunities across various sectors, including retail, MSMEs, agriculture, and housing finance. It can be utilized for financing business loans, working capital requirements, and capital expenditure.

This arrangement not only provides opportunities for product diversification and expansion into new markets but also enable lenders to share the credit risk and leverage each other’s strengths.

The Future of Co Lending

As it gains traction in the financial services industry, the future looks promising. The joint contribution of credit by multiple lenders offers benefits like diversification, reduced risk, and access to larger loan amounts.

This growing trend is set to disrupt the traditional lending industry, attracting more lenders and borrowers. With housing finance companies and other financial institutions embracing co lending, there is potential to bridge the credit gap and offer affordable cost loans to underserved customers.

The entire process, from application to recovery of interest, is streamlined, saving a lot of time for both lenders and borrowers.

Frequently Asked Questions

What is the meaning of onward lending.

Onward lending refers to the practice of borrowing funds from one lender and then lending them to another borrower. It is a common strategy, where multiple lenders collaborate to finance a single loan. This approach helps spread the risk across different borrowers but also comes with its own set of risks and regulatory requirements.

How does a co-lending model work?

A co-lending model works by bringing together multiple lenders to fund a single loan. Each lender contributes based on their risk appetite and return expectations, with the borrower receiving funds in proportion to each lender's contribution. The lead lender manages loan servicing and distributes returns to other lenders.

What is the typical ticket-size and rate of interest in co-lending?

The ticket-size varies across platforms and lenders, ranging from a few thousand dollars to several million dollars. Similarly, the interest rates also vary depending on the platform and lender, but they are generally competitive and affordable compared to traditional lending options. The rates are determined based on various factors such as the borrower's creditworthiness, loan tenure, and market conditions.

Is co-lending only limited to housing finance?

No, it is not limited to housing finance. While it is true that it has gained popularity in the housing finance sector, it can also be extended to other segments such as personal but generally, co-lending offers competitive rates compared to traditional lenders.

How to Choose the Right Co-Lending Partner?

When choosing a partner, it's important to find someone who shares your business goals and values. Consider their expertise and experience in your industry, evaluate their financial stability and track record of successful partnerships, and ensure clear communication channels for a strong working relationship.

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• Co-Lending Model: Key to Winning New Market Share

In the past few months, the Indian lending ecosystem has witnessed many new pacts between banks and NBFCs. Experts believe that these co-lending/co-origination pacts will help lenders improve their credit outreach and significantly extend accessibility for many underserved borrowers in the country. 

According to a report by the Association of Chartered Certified Accountants (ACCA), the Indian MSME segment faces a credit deficit of nearly $240 Bn.

(Source: https://accaindia.co.in/contenthub/Articles/images/ACCA_june.pdf)

Another emerging challenge to Indian lenders was highlighted by the Chairman of SBI, Mr. Dinesh Khara , when he called on the banking sector to increase their green lending activities to invest in sectors like renewable energy and sustainable infrastructure, while simultaneously helping other sectors like agriculture, to mitigate the effects of climate change.

To address the challenge of the rising credit gap within the underserved economy, RBI has introduced this new model of partnership between banks and NBFCs.

In this article, we will decode the Co-Lending Model (CLM) and why it can become a key to winning more market share for Indian lenders.

What is Co-lending?

Co-lending is an arrangement where banks and non-banks (NBFCs) can form agreements and engage in priority sector lending.

In India, RBI proposed a framework for co-lending, known as the co-lending model (CLM), in 2020. According to the  master directions from RBI , financial institutions must direct 40% of all lending activities towards priority sectors as they contain many credit-starved borrowers. The list includes:

• Export Credit
• Social Infrastructure
• Renewable Energy

Although Indian banks have ample funds and can offer loans at significantly lower rates, stringent regulations and poor outreach infrastructure hamper their ability to extend credit to the unorganized segments (that also contain many borrowers in these priority sectors). NBFCs, on the other hand, due to their agile nature and less stringent regulation, enjoy greater penetration into the market.

While NBFCs usually have agile frameworks, they can still suffer from liquidity crises.

An example of such a situation was the 2018 IL&FS crisis. It was fueled primarily by the lack of asset and liability management (ALM).

The crisis was a wake-up call for many NBFCs to create an adequate pool of credit. Additionally, to ensure that there aren’t any future liquidity crises, RBI in 2019 issued guidelines for all NBFCs to build a Liquidity Risk Management Framework. It would create a more regulated flow of credit and would result in improved credibility of NBFCs.

In this next section, you will find out about requirements for banks and NBFCs to enter into the CLM.

How does co-lending work?

Banks and NBFCs were forming pacts to pursue new markets well before the introduction of CLM. Previously, RBI had released a notification on 21st Sept 2018 titled  ‘ Co-origination of loans by Banks and NBFCs for lending to priority sector ‘ highlighting rules and regulations for the parties involved in co-lending.

On 5th Nov 2020, RBI released another notification titled  ‘ Co-Lending by Banks and NBFCs to Priority Sector ‘ that served as a revision to the 2018 directions. 

Under this new version, all NBFCs (including HFCs) can enter co-lending pacts with partner banks. RBI mandated that some bank categories under Scheduled Commercial Banks (SCBs) cannot enter co-lending pacts with NBFCs. These banks include:

• Regional Rural Banks (RRBs)
• Small Finance Banks (SFBs)
• Urban Co-operative Banks (UCBs)
• Local Areas Banks (LABs) 

Here’s what you need to know about CLM 

• The bank/NBFC involved must formulate a board-approved policy that shall contain all the details regarding the exercise. The master agreement must be audited periodically, internally, and externally. The agreement must ensure adherence to the laid-out guidelines. Also, banks shall not enter a co-lending arrangement with any NBFC belonging to their promoter group. 
• 80% of the total credit risk under this model shall be on the bank’s loan book and the NBFC should bear the rest 20% of the risk. While engaging in the activity,  inter-alia , the partner bank must adhere to the outsourcing guidelines and not outsource its part of the credit sanction to the NBFC.
• The participants will pool all their funds required for lending activity within an escrow account – same for repayment.
• During the formulation of the master agreement, the bank can choose to mandatorily take their share of loans and conduct the required due diligence to check if the prospective borrower matches their risk appetite or not. Banks must conduct the screening in adherence to all EKYC and AML guidelines laid out by the RBI.
• The other arrangement is for the NBFC to disburse 100% of the loan amount and then present the case to the bank. The bank can then ‘ cherry-pick ‘ these cases and finance them accordingly. This arrangement will be akin to a  direct assignment transaction . The partner bank must adhere to the terms mentioned in the guidelines on Transactions Involving Transfer of Assets through Direct Assignment of Cash Flows and the Underlying Securities while taking the loans in its portfolio.
• A co-lender can assign loans to a third party only with consent of the other partner lenders.

Also, at any time:

• The NBFC must have the ability to generate a unified statement for any customer via the appropriate information sharing mechanisms with the partner bank.
• The interest rates charged to the borrowers will be all-inclusive interest. It means that the partner bank/NBFC can mutually decide, and charge interest based on their risk appetite.
• The lenders must disclose all the details of their arrangement upfront to the customer and take explicit consent before signing them up.
• Lenders must set up a robust grievance redressal mechanism. Any complaints against the participating entities must be resolved within 30 days. If not addressed, the borrower can escalate the issue with the concerned Banking Ombudsman/Ombudsman for NBFCs or the Customer Education and Protection Cell (CEPC) in RBI.
• Both the banks and the NBFCs must create and implement a business continuity plan to ensure uninterrupted service to their borrowers till repayment of the loans under the co-lending agreement or in the event of termination of co-lending arrangement between the co-lenders.

What are the challenges associated with CLM?

Although CLM has many benefits, there are a few challenges in the model that can reduce its efficacy. For instance, there are challenges in the way banks can undertake loans from NBFCs. We earlier mentioned that it can be done in either two ways:

• By mandatorily taking their share of loans per the guidelines from the Master agreement from the partner NBFCs and then conducting due diligence
• By choosing their share per convenience from the basket of loans that the NBFCs have financed already

If we go by the first approach, there lies a risk in increasing the overall timeline of the journey. While banks can, in theory, rely upon the NBFCs to perform required checks. But if they choose to conduct these checks themselves with their relatively stricter due diligence (which banks prefer usually to avoid bad loans), it can overturn the advantages that NBFCs bring to this partnership.

In the second approach wherein the loan takeover by the partner bank is akin to digital assignment transaction, there are many aspects that pose operational challenges for the model. In order for this partnership to become successful, banks must address these challenges first. Some of these include – adherence to direct assignment guidelines, security creation and recovery, the takeover of loans and credit enhancement.

Thus, both the partner bank and NBFC will have to shape their policies in a way to maximize the flexibility of this arrangement while keeping in mind the convenience of the borrower.

What are the benefits of CLM?

CLM brings many benefits to the lending ecosystem. For example,

• It helps improve the relationship between banks and NBFCs.
• Creates a room for NBFCs to raise funds swiftly.
• Allows banks to enjoy greater flexibility while allocating more funds to underserved markets.
• Provide greater operational flexibility and bring down the loan interest rates to increase access to credit for millions of underbanked borrowers.
• Allow HFCs to enter co-origination pacts with banks (note that this was not allowed in the 2018 version of the co-origination framework).
• Borrowers can enjoy competitive interest rates, highly affordable loans, and access to higher loan amounts.

How can Digital improve the efficacy of CLM?

Over the last two years, India’s digital infrastructure has seen many innovations such as UPI, Digi-locker, e-KYC , e-Sign, OCEN, Account Aggregators, and more that have vastly improved the odds of success for CLM.

Now, the overall efficacy of CLM depends on the achievement of KPIs such as increasing the accuracy of credit profiling, lowering the cost of borrowing, faster TATs, minimal credit risk, higher operational flexibility, convenient repayment schedule, and more. A robust digital stack can help co-lenders create a truly paperless process that will significantly bring down the overall application processing time.  

For example, LeadSquared hosts many capabilities to support co-lending needs such as:

• One time API integration to simplify the flow of data between multiple lending partners
• Rich data analytics and reporting  to give you a 360-degree view into the customer lifecycle journey
• A  Workflow Builder  to build highly flexible and agile borrower journeys in just a few clicks
• Straight Through Processing  (STP) for an end-to-end automated and completely paperless journey
• Partner Onboarding and Management for a seamless co-lending experience
• A robust Debt Recovery platform to minimize loan delinquencies and maximize collections
• Pre-screening functionality  with checks such as Aadhar, PAN, CIBIL, Experian, and more

For example, Profectus Capital , a leading Indian NBFC was able to increase its funnel quality by over 70% using pre-screening capabilities offered by LeadSquared. Also, they were able to achieve 60% higher process efficiency and optimize their spending on DSAs by nearly 55%.

A robust tech stack will ensure that banks and NBFCs can make the most of their co-lending partnership and maximize the financial inclusion of the Indian borrowers.

Before we wrap up, let us look at some of the co-lending pacts signed in 2021. 

List of Co-Lending pacts signed in 2021

2021 saw many banks (majorly public sector) and NBFCs come together to bridge the credit gap in the underserved segment.  Housing finance  and SME finance deals comprise nearly half of all new deals made in 2021. Here’s the list of the co-lending deals in 2021 so far. 

Co-lending Deals Between Banks and HFCs

• Yes Bank – PNB Housing Finance
• Yes Bank – Indiabulls Housing Finance
• Central Bank of India – Indiabulls Housing Finance
• Central Banks of India – IIFL Home Finance
• Indian Bank – Indiabulls Housing Finance
• Indian Bank – IIFL Home Finance
• Punjab National Bank – IIFL Home Finance
• Punjab & Sind Bank – Indiabulls Home Finance

Co-lending Deals Between Banks and SME Finance NBFCs

• Bank of Baroda – U GRO Capital
• IDBI Bank – U GRO Capital
• Bank of India – MAS Financial Services

Other Co-lending Deals

• SBI – Paisalo Digital
• Yes Bank – WheelsEMI
• SBI – Vedika Credit Credit Capital Ltd. 
• Indian Bank- Indiabulls Commercial Credit
• SBI- Save Microfinance
• Karur Vysya Bank – Chola Financial Services
• IndusInd Bank – Indel Money
• Prest Loans – U GRO Capital
• MAS Financial Services – CredAvenue
• Zip Loan – U GRO Capital

There is a rising credit demand in priority sectors that needs to be addressed.

The formalized framework of CLM supports and enables banks and NBFCs to cooperate and enjoy many benefits that were not available to them previously like greater penetration and swift access to funds.

By introducing CLM, RBI has already taken a positive step towards complete financial inclusion. It is now up to the lenders on how they can make this a successful initiative.

To make the most of their CLM partnerships, lenders must implement the right policies and use digital lending tools for agile operations.

To understand how  LeadSquared Lending CRM  can help supercharge your co-lending process.

There are multiple ways by which NBFCs can raise funds. Here are a few: – Loans from banks – usually long term but low-interest loans – Raise funds via Non-convertible Debentures (NCDs) – Via Foreign Direct Investment (FDI) – By issuing commercial paper for short term loans – By co-lending with banks – Through Bonds – By securitization of assets

Sectors in the market that do not receive adequate and timely credit are classified as Priority Sectors by the RBI. Any lending activity to these sectors falls under Priority Sector Lending. Since these are heavily underserved/underbanked, RBI has mandated Indian Banks to direct 40% of all lending activities into them. A few examples of such sectors are Agriculture, Education, Renewable Energy, MSMEs, Housing, etc.

Mayank is a Product Marketer at LeadSquared. He is always on the lookout for the latest financial trends that influence the global lending market. You can connect with him on LinkedIn or write to him at [email protected].

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Co-lending 101:

Decoding the complicated maze of co-lending partnerships.

R ead the e-book to know:

• What is co-lending and why is everyone talking about it?
• Different models of co-lending partnerships 
• The role of FinTechs in consummating this partnership
• The role of risk and collection intelligence in co-lending partnerships

Executive Summary

Co-lending is the coming together of banks and NBFCs to disburse loans. The idea behind such a structure is to leverage their comparative advantages for strengthening financial inclusion. Although the model holds immense potential to transform priority sector lending in India, aligning divergent systems of banks and NBFCs for joint disbursal of loans can be an operational nightmare. This e-book serves as a comprehensive guide for understanding the co-lending model, its benefits, and limitations. It also shines a light on how technology players can help with strategic alignment, process improvement, and system implementation.

“Much like marriage, co-lending is a daily challenge. Banks and NBFCs operate on different systems, divergent underwriting processes, and distinct parameters. For the partnership to stand a chance, banks and NBFCs must be prepared for constant reconciliation of their distinct personalities, traits, and dispositions.” 

Rajat Deshpande, Co-Founder and CEO, FinBox

Authors' Bio

Anna Catherine Content Specialist, FinBox

Anna is a content specialist at FinBox who tells FinTech stories that drive insights using data, narrative, and visuals. Prior to FinBox, she was with a communication agency where she worked on a range of branding activities such as positioning, conceptualization, and writing for some leading brands - Mercedes-Benz Research and Development India, Lenovo, Shell, and Toyota KiNTO, to name a few.

She holds an honours degree in Economics and a post-graduate degree in International Relations.

Rajat  Deshpande, Co-Founder and CEO, FinBox

Rajat is a Fintech specialist and a startup enthusiast who started FinBox along with his Co-Founders with a mission to lay out digital infrastructure for alternate finance solutions. Under his leadership, FinBox has built multiple products in the Embedded Finance and Big Data credit analytics spaces. FinBox has enabled over 16 million lending decisions in India and SE Asia. In his prior stints, Rajat was associated with the global consulting firm ZS, Citigroup and GoPigeon Logistics as Head of product.

He holds a Dual (BTech+MTech) degree in Mechanical Engineering from IIT, Bombay.

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The relevance of co-lending and the role of tech platform in scaling the model

• Original Research
• Published: 10 December 2021
• Volume 9 , pages 225–232, ( 2021 )

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• K. Karthik CA   ORCID: orcid.org/0000-0002-8909-3121 1 &
• Sai Vinod Kumar Pandiri   nAff1  

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In this article we will be focus on what co-lending is and why this is emerging as an important asset class. Co-Lending in simple terms is a joint lending process involving two financial institutions. We will also be delving on to what the advantages are for each of the stakeholders: Banks, NBFCs and borrowers. Further we will dive deep down into the current issues faced by this model both from an operational and technological aspect and the role played by Fintech companies/third party integrations in solving some of these issues aiding in scale up of this vertical.

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Dinesh Unnikrishnan, Yes Bank, Indiabulls ink pact for co-lending:10 Key questions answered, https://www.moneycontrol.com/news/business/yes-bank-indiabulls-ink-pact-for-co-lending10-key-questions-answered-7243591.html

Ram Kumar K, HDFC-Indiabulls Housing co-lending partnership: Is it a prelude to something bigger?, https://www.thehindubusinessline.com/money-and-banking/hdfc-ibhfl-co-lending-partnership-is-it-a-prelude-to-something-bigger/article34382588.ece

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Karthik, K., Pandiri, S.V.K. The relevance of co-lending and the role of tech platform in scaling the model. CSIT 9 , 225–232 (2021). https://doi.org/10.1007/s40012-021-00343-6

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Received : 03 November 2021

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Published : 10 December 2021

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DOI : https://doi.org/10.1007/s40012-021-00343-6

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Bank-NBFC co-lending: how it works, and the concerns it raises

Several banks have entered into co-lending 'master agreements' with nbfcs, and more are in the pipeline. this, however, has come in for criticism from several quarters..

A November 2020 decision by the Reserve Bank of India (RBI) to permit banks to “co-lend with all registered NBFCs (including HFCs) based on a prior agreement”, has led to unusual tie-ups like the one announced earlier this month between the State Bank of India (SBI) and Adani Capital .

The ‘Co-Lending Model’

In September 2018, the RBI had announced “co-origination of loans” by banks and Non-Banking Financial Companies (NBFCs) for lending to the priority sector. “The arrangement entailed joint contribution of credit at the facility level by both the lenders as also sharing of risks and rewards”, the RBI said.

Subsequently, based on feedback from stakeholders and “to better leverage the respective comparative advantages of the banks and NBFCs in a collaborative effort”, the central bank allowed the lenders greater operational flexibility, while requiring them to conform to regulatory guidelines.

The primary focus of the revised scheme, rechristened as ‘Co-Lending Model’ (CLM), was to “improve the flow of credit to the unserved and underserved sector of the economy and make available funds to the ultimate beneficiary at an affordable cost, considering the lower cost of funds from banks and greater reach of the NBFCs”, the RBI said in a circular issued on November 5 last year.

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Bank-NBFC tie-ups

Several banks have entered into co-lending ‘master agreements’ with NBFCs, and more are in the pipeline.

On December 2, SBI, the country’s largest lender, signed a deal with Adani Capital, a small NBFC of a big corporate house, for co-lending to farmers to help them buy tractors and farm implements.

SBI’s giant network includes 22,230 branches, 64,122 automated teller machines (ATMs) and cash deposit machines (CDMs), and 70,786 business correspondent (BC) outlets across the country. Adani Capital has a network of just 60 branches and has disbursed around Rs 1,000 crore, according to its website.

On November 24, Union Bank of India entered into a co-lending agreement with Capri Global Capital Ltd (CGCL), with the aim “to enhance last-mile finance and drive financial inclusion to MSMEs by offering secured loans between Rs 10 lakh to Rs 100 lakh” initially through “100+ touch points pan-India”.

Risk in co-lending

The move by big banks to tie up with small NBFCs for co-lending has come in for criticism from several quarters.

Under the CLM, NBFCs are required to retain at least a 20 per cent share of individual loans on their books. This means 80 per cent of the risk will be with the banks — who will take the big hit in case of a default.

The terms of the master agreement may provide for the banks to either mandatorily take their share of the individual loans originated by the NBFCs on their books, or to retain the discretion to reject certain loans after due diligence prior to taking them on their books.

Interestingly, the RBI guidelines provide for the NBFCs to be the single point of interface for customers, and to enter into loan agreements with borrowers, which should lay down the features of the arrangement and the roles and responsibilities of the NBFCs and banks. In effect, while the banks fund the major chunk of the loan, the NBFC decides the borrower.

Corporates in banking

While the RBI hasn’t officially allowed the entry of big corporate houses into the banking space, NBFCs — mostly floated by corporate houses — were already accepting public deposits. They now have more opportunities on the lending side through direct co-lending arrangements.

While the RBI has referred to “the greater reach of the NBFCs”, many bankers point out that the reach of banks is far wider than small NBFCs with 100-branch networks in serving underserved and unserved segments.

SBI on co-lending

Announcing the tie-up with Adani Capital, SBI chairman Dinesh Khara said the partnership “shall help SBI to expand customer base as well as connect with the underserved farming segment of the country and further contribute towards the growth of India’s farm economy”. SBI, he said, would “continue to work with more NBFCs in order to reach out to maximum customers in far flung areas and provide last mile banking services”.

Adani Capital MD & CEO Gaurav Gupta said the company aimed to “make economical credit available to the micro-entrepreneurs of India”. Through the partnership with SBI, it sought to “contribute to farm mechanisation and play a role in improving productivity and income of the farm segment”.

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How co-lending is changing the credit landscape in India

Fintech evolution in india has cleared the path for co-lending which just might be the answer to the country's multi-trillion dollar liquidity issue. here's how banks, nbfcs, and large lenders embracing the co-lending model will improve credit access for people.

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One of the most important tenets of financial inclusion is easy and on-time access to credit—at a reasonable cost, irrespective of geographical location. India is still a credit-hungry nation. This unmet credit gap serves as both a challenge and an opportunity for financial services providers.

Co-lending can solve India’s liquidity problem

The country’s fintech sector has played a pivotal role in bridging such gaps. Innovation in this space has surged, driven by favourable government policies on entrepreneurship, infrastructure and risk capital. Through emerging technologies, lenders have been able to design, launch, and distribute customised financial products at lower costs.

Digital lending is the fastest growing fintech segment in India, having attained a value of $110 billion in 2019, from just $9 billion in 2012. Dominated by fintech startups and NBFCs , this sector is expected to reach a value of $350 billion by 2023.

However, liquidity has always been an issue in such endeavours. Legacy banks have been reluctant to provide loans to avoid systemic liability. India’s debt capital markets have also remained in a nascent stage with conservative regulations.

This was until 2018 when the RBI put in place a framework for co-origination by banks and registered NBFCs for credit to the priority sector. The scheme was re-christened the “co-lending” model (CLM) in 2020, enabling operational flexibility for lenders, while requiring them to meet regulatory norms regarding KYC, outsourcing, and so on. However, the co-lending model acknowledges that India’s public-sector banks (PSBs) dominate a huge percentage of India’s liquidity reserves.

As per the RBI, by December 31, 2021, bank credit stood at $1.56 trillion. The entire banking system needs to be included in any discussion on the meaningful expansion of credit. By tapping into this liquidity, new-age lenders can scale at lower leverage. They can use the capital for experimentation and product development. At lower leverage, they can better handle cash flows, making them resilient to macroeconomic shocks in the future.

An off-balance sheet model helps lending companies tackle many issues, primarily ALM pitfalls, which led to a liquidity crisis in the NBFC sector in 2018.

Solving the problem of systemic liability 

The co-lending model has evolved into an effective liability strategy, where new-age lenders can use their capital more efficiently. They can simply find lending partners to scale products with a good product-market fit. The key to maintaining a healthy co-lending revenue model is ensuring that the off-balance sheet spread is greater than or at least equal to the on-balance sheet spread. This helps ensure that the liability strategy has no adverse impact on the P/L.

In addition, lenders can address the problem of systematic liability. Through partnerships between two regulated entities—NBFCs and big banks—the CLM ensures a high degree of compliance and customer protection.

New-age lenders must hold themselves to the same levels of compliance and regulatory overview as their legacy peers to be truly successful in co-lending. This will ensure that products and overall structures do not run into regulatory issues.

Technology enables credit access

The co-lending partnerships have been a win-win for all—banks, NBFCs, and the unserved and under-served sectors of the economy. Plus, NBFCs can now compete on the pricing front. Larger lenders, bearing a larger share of the loan at a relatively lower cost of capital, allow new-age lenders to price products at a lower rate. This makes credit affordable for the end consumer.

On the other hand, banks have been able to leverage technology in origination, credit assessment and collection. This includes the use of alternative data, real-time digital back-end operations, API-based underwriting, automation of KYC processes, reporting, e-documentation, and more. The coming together of these synergies has ensured seamless credit flow to the under-served.

In simple terms, larger lenders have been able to extend loans to borrowers whom they would have otherwise rejected, leading to greater financial inclusion. This has contributed to breaking the vicious cycle wherein banks weren’t keen to extend small-ticket loans to individuals without a credit history. And with no access to loans, these individuals would have no way to build their credit scores.

Co-lending has helped unlock pools of capital lying dormant, as the cost of executing small ticket lending was traditionally expensive for larger lenders.

Unlocking a $1 trillion digital lending opportunity

In 2021, India recorded the highest growth in cellular broadband data usage, with 4G data recording an increase of 31 percent. Mobile broadband subscribers have more than doubled between 2016 and 2021.

With the digital divide narrowing at one of the highest rates in the world, India is poised to generate $1 trillion worth of economic value from the digital economy by 2025. A 2018 BCG report forecasted that total retail loans disbursed digitally could reach a value of $1 trillion by 2023.

Given this backdrop and the benefits of CLM, India is poised to solve its multi-trillion-dollar liquidity issues in the coming years. Strong structural incentives will encourage financial players to come together and meet the growing credit demand with success.

The writer is CFO of Capital Float.

The thoughts and opinions shared here are of the author.

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• Different mindset needed to make co-lending model work, say leaders

The Reserve Bank India’s co-lending model has pushed risk sharing and facilitated synergies between banks and non-bank lenders. According to leaders at a panel discussion at FIBAC 2021, the model is attractive in theory but faces significant organisational, operational and technical issues.

• Published On Dec 24, 2021 at 08:01 AM IST

• Updated On Dec 24, 2021 at 08:01 AM IST

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Co-lending rises over fourfold in fy23; assets cross rs 25,000 crore.

Co-lending amounts more than quadrupled in just about a year with banks declaring such portfolios of more than Rs 25,000 crore in FY23, with State Bank of India (SBI) and Bank of Baroda at the top of the leaderboard. In FY22, disbursements were nearly Rs 5,000 crore through co-lending partnerships.

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Free Lender Presentation Template

Take advantage of the free lender presentation template powered by Highnote. It’s as simple as it gets – just duplicate your favorite lender presentation template, customize it, add your information, and you’re good to go!

15 assets below

Meet the Agent

This section of the free lender presentation template introduces the dedicated agent who will guide clients through the lending process. It offers a brief background on the agent's experience, expertise, and how they can assist in finding the perfect loan. The aim is to build trust and rapport with potential clients by showcasing the agent's qualifications and dedication to client satisfaction.

About the Company

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Here, clients are introduced to the comprehensive range of mortgage services provided by the company. From first-time homebuyer loans to refinancing options, this section outlines each service's features and benefits. It is meant to inform clients of their options and how the company can cater to diverse needs, whether they're buying a new home, refinancing, or seeking specialized loan products.

Finding The Right Loan for You

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In this section, clients learn about the refinancing options available to them, including the potential benefits such as lower interest rates, reduced monthly payments, or changing the loan term. It explains the refinancing process, eligibility criteria, and how refinancing can align with clients' financial strategies. The goal is to provide clarity on refinancing and how it can be a tool for financial improvement.

Our Loan Process at The Company

This segment takes clients through the company's step-by-step loan process, from application to approval and closing. It emphasizes transparency, efficiency, and support throughout each phase, providing a clear roadmap of what clients can expect. This detailed breakdown is intended to reassure clients of a smooth, understandable, and hassle-free experience.

Buying Power

Here, clients are educated on the concept of buying power and how it is determined by factors such as income, debt, credit score, and interest rates. This section aims to help clients assess their own buying power and how it affects their home purchasing options. It’s a crucial piece for setting realistic expectations and planning financially for a future purchase.

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Mortgage Recurring vs. Non-Recurring Costs

This section of the lender presentation template breaks down the costs associated with obtaining a mortgage, distinguishing between recurring costs (like property taxes and insurance) and non-recurring closing costs (such as fees and one-time payments). It’s designed to educate clients on the financial commitments of a mortgage, helping them budget and prepare for both the upfront and ongoing costs of homeownership.

Common Life Events That Can Keep Your Loan From Closing on Time

This segment addresses potential hurdles in the loan closing process, such as changes in employment, credit score fluctuations, or significant purchases. By identifying common issues, the company aims to guide clients on how to avoid these pitfalls, ensuring a timely and smooth closing.

Buy or Rent: Which One Should You Choose?

This part offers a comparative analysis of buying vs. renting, considering financial, lifestyle, and long-term implications. It aims to provide clients with a balanced perspective, helping them make an informed decision based on their personal circumstances and financial goals.

Client Testimonials

Featuring real-life stories and feedback from satisfied clients, this section is designed to build confidence in the company's services through social proof. Testimonials highlight the positive experiences of past clients, showcasing the company's expertise, customer service, and successful outcomes.

Let’s Get Started

The closing section of the presentation is a call to action, encouraging clients to take the next step in their home financing journey with the company. It provides information on how to get in touch, what information to prepare, and reassures clients of the company's commitment to guiding them through the process. This final note is meant to motivate and invite clients to embark on their path to homeownership with the company's support.

I look forward to having a more in-depth conversation with you soon.

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One of the other ways to use Highnote that extremely benefits all is a listed property link tour. You can share additional photos, floorplan, zoning and bylaws of the city, potentials, highlights, 3D virtual matter port, your own video walkthrough and marketing material in addition to all other features about that specific property all in one link.

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Benefits of Using Lender Presentation Template

Today, we unravel the secret weapon that successful financial professionals rely on: Highnote’s Lender Presentation Templates. These templates aren’t just tools; they are your gateway to impactful financial presentations that elevate your business. Crafting a compelling lender presentation is the key to persuading home buyers and showcasing expertise.

Crafting a Powerful Narrative

When it comes to mortgage advising, storytelling can be a powerful tool. Highnote’s Lender Presentation Templates are designed to help you weave a compelling narrative that captivates your audience. You can leverage these lender presentation templates to showcase your expertise, and build trust and connection with potential clients. The templates guide users in structuring their presentations in a way that engages and informs, ensuring that every client understands the value you bring to the table.

Tailored for Mortgage Advisors

Not all presentations are created equal, and that’s especially true in the mortgage industry. Highnote understands the unique needs of professionals who require lender presentations that are not just visually appealing but also specifically tailored to the intricacies of mortgage advising. The templates come pre-loaded with sections that cater to the specifics of mortgage advisory, saving time and effort in customization.

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The most successful mortgage professionals need efficiency in their workflow. Highnote’s lender presentation templates streamline the customization process, allowing for quick and easy adaptation to specific clients or scenarios. This time efficiency translates to increased productivity, enabling you to focus more on your clients and less on the intricacies of presentation design.

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Consistency is paramount in lender presentations. Highnote’s templates guarantee that your brand identity remains consistent, reinforcing your image as a trustworthy and results-oriented professional.

Elevate Your Business with Highnote’s Lender Presentation Templates

Highnote’s Lender Presentation Templates aren’t just about aesthetics; they are about empowering professionals to thrive in their presentations. Here’s how they take your financial game to the next level:

Visual Excellence for Impactful Presentations

These templates go beyond standard presentations. They create a visual impact that resonates with home buyers and clients alike. Engaging design elements and organized structures enhance the overall presentation, making your lender presentations stand out.

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Seamless Delivery for Client Convenience

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What to Know About Biden’s New Student Debt Relief Plan

The proposal would affect nearly 30 million people and would target groups that have had hardships in repaying their loans.

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Biden Announces New Plan for Student Debt Relief

President biden announced a large-scale effort to help pay off federal student loans for more than 20 million borrowers..

Today, I’m proud to announce five major actions to continue to relieve student debt for more than 30 million Americans since I started my administration. And starting this fall, we plan to deliver up to $20,000 in interest relief to over 20 million borrowers and full forgiveness for millions more. [applause] I will never stop to deliver student debt relief and hardworking Americans. And it’s only in the interest of America that we do it. And again, it’s for the good of our economy that’s growing stronger and stronger, and it is, by freeing millions of Americans from this crushing debt of student debt. It means they can finally get on with their lives instead of being put — their lives being put on hold.

By Erica L. Green

Reporting from Washington

President Biden released details on Monday of his new student loan debt forgiveness plan for nearly 30 million borrowers.

The proposal still needs to be finalized and will have to withstand expected legal challenges, like the ones that doomed Mr. Biden’s first attempt to wipe out student debt on a large scale last year.

Biden administration officials said they could begin handing out some of the debt relief — including the canceling of up to $20,000 in interest — as soon as this fall if the new effort moves forward after the required, monthslong comment period.

Here’s what is known so far about the program:

Who would benefit from the new plan?

The plan would reduce payments for 25 million borrowers and erase all debt for more than four million Americans. Altogether, 10 million borrowers would see debt relief of $5,000 or more, officials said.

The groups affected include:

— Borrowers whose loan balances have ballooned because of interest would have up to $20,000 of their interest balance canceled. The plan would waive the entire interest balance for borrowers considered “low- and middle-income” who are enrolled in the administration’s income-driven repayment plans.

The interest forgiveness would be a one-time benefit, but would be the largest relief valve in the plan. The administration estimates that of the 25 million borrowers that could see relief under this waiver, 23 million would see their entire interest balance wiped out.

— Borrowers who are eligible for, but have not yet applied for, loan forgiveness under existing programs like Public Service Loan Forgiveness or the administration’s new repayment program, called SAVE, would have their debts automatically canceled.

— Borrowers with undergraduate student debt who started repaying their loans more than 20 years ago, and graduate students who started paying their debt 25 or more years ago, would have their debts canceled.

— Borrowers who enrolled in programs or colleges that lost federal funding because they cheated or defrauded students would have their debts waived. Students who attended institutions or programs that left them with mounds of debt but bleak earning or job prospects would also be eligible for relief.

— Borrowers who are experiencing “hardship” paying back their loans because of medical or child care costs would also be eligible for some type of relief. The administration has not yet determined how these borrowers would be identified, but is considering automatic forgiveness for those at risk of defaulting.

How is this different from the last plan?

Mr. Biden initially tried to grant $400 billion in debt relief for 40 million borrowers by using the Higher Education Relief Opportunities for Students Act of 2003, or HEROES Act, which the administration argued allowed the government to waive student debt during a national emergency like the Covid-19 pandemic.

The Supreme Court blocked that move , saying that Mr. Biden had exceeded his authority.

The new plan would forgive some or all loan debt for nearly 30 million borrowers under the Higher Education Act, the federal law that regulates student loan and grant programs. By targeting specific groups of borrowers — instead of offering broad loan forgiveness — the administration believes it can act within the narrower confines of that law.

The Biden administration said lawyers for the White House and the Education Department studied last year’s Supreme Court ruling and designed the new program to make sure it did not violate the principles laid out by the justices.

Still, there could be questions about whether the borrowers under the latest plan would be considered “limited,” as the Supreme Court said the Higher Education Act requires, or whether the administration again overstepped its authority.

What’s the timeline?

The new plan still needs to be published in the Federal Register, which then will start a monthslong public comment period. Administration officials have said they hoped some of the provisions would begin going into effect in “early fall.”

That could leave the debt relief plan unresolved as voters go to the polls in November to choose between Mr. Biden and former President Donald J. Trump.

But Biden campaign officials hope the latest effort will help rally voters who were sorely disappointed by the Supreme Court’s decision last year.

Erica L. Green is a White House correspondent, covering President Biden and his administration. More about Erica L. Green

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UPDATE: New Aurinia Presentation Details at the 2024 Bloom Burton & Co. Healthcare Investor Conference

ROCKVILLE, Md. & EDMONTON, Alberta--(BUSINESS WIRE)-- NOTE: The new presentation time for Aurinia’s presentation at the 2024 Bloom Burton & Co. Healthcare Investor Conferences is 4:00 to 4:30 PM Eastern Time. This event is presentation only. Webcast Details remain the same.

The updated release reads:

Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH) (Aurinia or the Company) today announced that it will attend the 2024 Bloom Burton & Co. Healthcare Investor Conference taking place at the Metro Toronto Convention Centre in Toronto from April 16-17, 2024.

Aurinia management will host one-on-one meetings with investors and will host a presentation on Tuesday, April 16, from 4:00 to 4:30 PM Eastern Time. A live webcast of the session will be available on the investor section of Aurinia’s website, which can be found here .

About Aurinia

Aurinia Pharmaceuticals is a fully integrated biopharmaceutical company focused on delivering therapies to people living with autoimmune diseases with high unmet medical needs. In January 2021, the Company introduced LUPKYNIS ® (voclosporin), the first FDA-approved oral therapy dedicated to the treatment of adult patients with active lupus nephritis. The Company’s head office is in Edmonton, Alberta, its U.S. commercial office is in Rockville, Maryland. The Company focuses its development efforts globally.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240416949452/en/

Media and Investor Inquiries: Andrea Christopher Corporate Communications and Investor Relations, Aurinia [email protected] [email protected]

Source: Aurinia Pharmaceuticals Inc.

Released April 16, 2024

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