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Muthoot finance eyes co-lending arrangements with other NBFCs
March 06, 2023
If the plan fructifies, the Ernakulam (Kerala)-headquartered gold loan company will be the dominant partner in co-lending due to its robust capital position. It had a capital adequacy ratio of 33.29 per cent as of December-end 2022.
“We will co-lend with smaller NBFCs. This is an opportunity,” said George Alexander Muthoot, Managing Director.
As per RBI’s November 2020 notification, banks are permitted to co-lend with all registered NBFCs (including housing finance companies) to the priority sector. The co-lending banks will take their share of the individual loans on a back-to-back basis in their books.
However, NBFCs are required to retain a minimum of 20 per cent share of the individual loans on their books.
“Currently, the notification does not apply to co-lending by two NBFCs, and only governs co-lending arrangements between banks and NBFCs.
“In the past year especially, we have witnessed NBFCs, influenced by commercial requirements, entering into co-lending arrangements not only with banks but also with other NBFCs, enabling wider access to the credit market,” said Hufriz Wadia, Partner, AZB & Partners, in an article on the law firm’s website.
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