Published On : Mon, Sep 24th, 2018

RBI unveils norms on co-origination of loans

THE Reserve Bank of India (RBI) Friday announced guidelines for co-origination of priority sector loans by banks and NBFCs with a view to enhancing flow of funds to the sector at competitive rates.

As per the norms issued by the RBI for all scheduled commercial banks (excluding Regional Rural Banks and Small Finance Banks) and Non-Banking Financial Companies-Non-Deposit taking Systemically Important (NBFCND-SIs), the sharing of risks and rewards between these entities should be in a manner that enables appropriate alignment of respective business objectives, as per their mutual agreement.

The co-origination arrangement should entail joint contribution of credit by both lenders at the facility level. “Based on the respective interest rates and proportion of risk sharing, a single blended interest rate should be offered to the ultimate borrower in case of fixed rate loans,” it said