Bank of India signs MoU with NBFCs for priority sector loans

Indian Bank announced on Friday that it has entered into a memorandum of understanding with three large non-bank finance companies (NBFCs) and housing finance companies (HFCs) for co-sourced loans to priority sectors.

The Chennai-based lender has partnered with Indiabulls Housing Finance, Indiabulls Commercial Credit and IIFL Home Finance under this co-loan agreement.

In November 2020, the RBI issued guidelines on the ‘co-lending model’ allowing banks to co-lend with all registered NBFCs (including HFCs) to priority sector loans with the aim of improving the flow of credit to unserved and underserved areas and free up funds. available to borrowers at an affordable cost.

“The arrangement involves a joint contribution of credit at the facility level by the two lenders. It also involves the sharing of risks and rewards between the bank and the NBFC to ensure an appropriate alignment of the respective business objectives, in accordance with the mutually decided agreement between the bank and the NBFC, ”Indian Bank said in a press release. .

The bank expects to generate substantial business in the priority sector thanks to the co-loan during the third quarter of the current fiscal year.

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