RBI releases norms for co-origination of loans

RBI has said that it will soon release guidelines on what it called co-origination of loans by banks and non-bank finance companies (NBFCs) for the priority sector. Bankers said the move could help banks meet priority sector lending targets in a more convenient and organized manner, leveraging the reach of NBFCs.

The central bank did not define co-origination, it said co-origination arrangements “should entail joint contribution of credit by both lenders.”

“To provide the much-needed competitive edge for credit to the priority sector, it has been decided that all scheduled commercial banks (excluding regional rural banks and small finance banks) may co-originate loans with non-banking financial companies – non-deposit taking- systemically important (NBFC-ND-SIs), for the creation of eligible priority sector assets,” RBI said in a statement. The guidelines will issued by end of September 2018.

Priority sector lending includes loans to agriculture, micro enterprises, social infrastructure, education and renewable energy, among others.