SBI part­ners Edel­weiss for SME lend­ing

The Times of India (New Delhi edition) - - Times Business - TIMES NEWS NET­WORK

Mum­bai: SBI has signed an agree­ment with ECL Fi­nance, a sub­sidiary of Edel­weiss Fi­nan­cial Ser­vices, for co-orig­i­na­tion of loans to mi­cro, small and medium en­ter­prises (MSMEs).

The part­ner­ship be­tween SBI and Edel­weiss comes close on the heels of the lender set­ting up a spe­cial non-bank­ing fi­nance com­pany (NBFC) al­liance de­part­ment to step up lend­ing to the pri­or­ity sec­tor.

Co-orig­i­na­tion was in­tro­duced by the RBI to en­able banks ac­cess the last-mile reach of NBFCs and at the same time en­able fi­nance com­pa­nies to tap the re­sources of banks.

In terms of RBI’s norms, a min­i­mum 20% of the credit risk by way of di­rect exposure shall be on NBFC’s books till ma­tu­rity and the balance will be on the bank’s books. The NBFC has to give an un­der­tak­ing to the bank that its con­tri­bu­tion to­wards the loan amount is not funded out of bor­row­ing from the co-orig­i­nat­ing lender or any other group com­pany of the part­ner bank.

“This col­lab­o­ra­tion will help both SBI and Edel­weiss leverage their re­spec­tive strengths on cus­tomer ac­qui­si­tion, credit as­sess­ment and state-of-the-art tech­nol­ogy, to bring down cost of credit for the MSME sec­tor sub­stan­tially,” said ECL Fi­nance MD & CEO Deepak Mit­tal.

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