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RBI looks askance at co-lending arrangements
April 25, 2023
To put things in perspective, against ₹5,000 crore of loans originated through co-lending in FY22, the recently ended fiscal saw the number jump over five-fold to ₹25,000 crore.
“Some of these co-lending arrangements are being entered into by mid- and small-sized banks with non-banks which don’t have a long history or a proven track record. In such cases, the regulator is worried whether adequate checks and balances are in place to ensure that there are no lapses in underwriting,” said a senior executive of a private bank.
However, it seems that the larger banks are cautious about such arrangements.
For instance, KVS Manian, whole time director, Kotak Mahindra Bank, in an interview to businessline, said the model hasn’t evolved much yet for the bank to get comfortable with it.
The regulator is also perplexed that when some segments such as the market for home loans have seen a slowdown in demand, loans lent through co-lending agreements have grown at a mind-boggling pace.
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