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NBFC-Bank Co-Lending: FICCI Urges RBI to Keep Existing Rules

15 May 20251 min read
BANKING & FINANCENBFC-BankCo-Lending: FICCIUrges RBI to KeepExisting Rules15 May 2025safalsetu.com

Why in the news

FICCI urged the RBI not to replace today’s co-lending rules for NBFCs and banks.

Key facts

  • Current model: NBFCs gain flexibility and a waiver of the minimum holding period on loans sold to banks.
  • Proposal: banks and NBFCs underwrite and disburse together.

FICCI concerns

  • Scrapping track 2 would be disruptive and cut credit to vital segments.
  • NBFCs may shrink, with job losses, liquidity strain and higher risk.
  • Financial inclusion could suffer.

Exam angle

  • Cap on share sold: 80%.
  • Data cited by: ICRA.

Test yourself

1. Up to what share of a loan can an NBFC sell to a partner bank under the current co-lending model?

The notes say NBFCs sell up to 80% through direct assignment.

2. Which industry body asked RBI to retain the existing co-lending rules?

FICCI urged RBI to preserve the 'track 2' framework.

3. What did the RBI-proposed joint lending model require of banks and NBFCs?

Both lenders would underwrite and disburse simultaneously.

This topic is part of Daily Current Affairs 15 May 2025 (19 topics).

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