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As part of the policy on co-origination of loans by banks and NBFCs to the priority sector, the RBI said on Friday NBFCs can recommend to banks proposals as found relevant for joint lending, with each being given the flexibility to price their part of the loan exposure.
As per the RBI’s directive on co-origination of priority sector loans, a minimum of 20 per cent of the credit risk by way of direct exposure will be on the NBFC’s books till maturity and the balance will be on the bank’s books.
Under co-origination, the RBI expects the benefit of low-cost funds from banks, and lower cost of operations of NBFC, to be passed on to the beneficiary through a blended rate or weighted average rate.
The NBFC has to give an undertaking to the bank that its contribution towards the loan amount is not funded out of borrowing from the co-originating bank or any other group company of the partner bank.
Under the guidelines for co-origination of priority sector loans by all scheduled commercial banks (excluding regional rural banks and small finance banks) and NBFC-ND-SIs (non-banking financial companies - non-deposit taking - systemically important), based on the respective interest rates and proportion of risk sharing, a single blended interest rate should be offered to the ultimate borrower in the case of fixed rate loans.
In the scenario of floating interest rates, a weighted average of the benchmark interest rates in proportion to the respective loan contribution should be offered.
The lenders will be entitled to independently assess the risks and requirements of the applicant borrowers. The loan agreement would be tripartite in nature, wherein, both the bank and the NBFC will be parties as lenders to the loan agreement with the customer.
The bank and the NBFC will open an escrow type common account for pooling their respective loan contributions for disbursal as well as to appropriate loan repayments from borrowers, without holding the funds for usage of float.
Information sharing
Regarding loan balances, the NBFC/bank will maintain individual borrower’s accounts and should also be able to generate and issue a single unified statement to the customer, through appropriate sharing of required information with the bank/NBFC.
With regard to grievance redress, any complaint registered by a borrower with the NBFC/bank will also be shared with the bank/NBFC. In case the complaint is not resolved in 30 days, the borrower would have the option to escalate the same with the concerned banking/NBFC ombudsman.
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