Mahindra Finance has recently announced its inaugural co-lending partnership with SBI, India’s largest public sector bank. The primary objective of this collaboration is to address the underserved segments of the population by offering accessible and affordable credit solutions.
This strategic alliance leverages the extensive distribution network of Non-Banking Financial Companies (NBFCs) in combination with the cost-effective capital resources of banks, thereby ensuring a broader reach and more competitive interest rates for customers.
RBI introduced the CLM model (Co-Lending Model) in 2020 as an improvement over the co-origination loan scheme of 2018. The objective was to make funds available for the unserved and underserved sector of the economy. The model requires NBFCs to be the single point of interface for the customers and in this case, Mahindra Finance does so.
The co-lending initiative has been introduced on a pan-India level for Mahindra Finance customers, with interest rates tailored to each customer’s unique credit profile. This approach guarantees a personalized and competitive financing experience. The partnership with SBI underscores the mutual commitment of both organizations to empower the Micro, Small, and Medium Enterprises (MSME) sector in the long term.
“This collaboration represents a significant stride toward enhancing financial inclusivity and accessibility. As we move forward, our core focus remains on fostering innovation, embracing strategic partnerships, and customizing our services to meet the ever evolving needs of our valued customers,” commented Raul Rebello, MD & CEO-Designate of Mahindra Finance.
The surge in co-lending models between banks and Non-Banking Financial Companies (NBFCs) has created a ripple effect, with co lending between NBFCs emerging as a funding-efficient growth strategy for smaller entities. Simultaneously, this approach aids larger organizations in streamlining their operations and minimizing turnaround times, particularly when expanding into new geographic markets. To know more about co-lending pacts, check this article.
The co-lending arrangement between ICICI Bank and SBFC (Small Business FinCredit) that took place in 2019 is one such example where the two entities joined hands to provide credit to the priority sector. For such arrangements to thrive, the stakeholders involved must be mutually benefitted.
As a leading NBFC in India with the current AUM of over USD 11 Billion, Mahindra Finance through this collaboration with SBI, is committed to delivering affordable credit solutions to its valued customers, thereby broadening its portfolio and enhancing financial accessibility.
