According to CRISIL Ratings, the co-lending book of non-banking finance firms (NBFCs) is anticipated to reach Rs 1 trillion by June 2024 due to increased interest from partner banks, the advantage of capital access, and diversification.
Ajit Velonie, senior director at CRISIL Ratings, stated that, economic momentum is expected to be robust over the medium term, averaging 35–40% yearly growth. Through the co-lending arrangement, the Assets Under Management (AUM) reached around Rs 55,000 crore in March 2023.
Given the greater risk weights associated with personal loans, the partners may decide to concentrate more on other asset classes, such as house loans and loans to micro, small, and medium-sized companies (MSME).
According to Velonie, co-lending is viewed as beneficial for both banks and NBFCs since it permits the pooling of risks and benefits. Co-lending offers a means of diversification and access to bank finance for small and mid-sized NBFCs.
Housing loans come in second at about 20%, followed by unsecured MSME loans and gold loans at roughly 13% apiece. The remaining 20% is made up of car loans and secured MSME loans, which include loans secured by real estate.
Controlled asset quality, as observed thus far in the co-lending portfolio of banks and NBFCs, will sustain growth.
