SBI partners Edelweiss for SME lending
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.