Crisil anticipates a robust growth trajectory of 35-40% annually over the medium term | Image:PTI
Crisil Ratings revealed on Monday that the assets under management (AUM) from co-lending partnerships between non-banking finance companies (NBFCs) and banks are on the verge of reaching Rs 1 lakh crore, marking a key milestone more than five years since the model’s inception.
An analysis conducted by Crisil, covering approximately 100 NBFCs representing over 90 per cent of the sector’s AUM, highlighted that personal loans constitute nearly one-third of the AUM, with housing loans following closely at 20 per cent. Unsecured MSME loans and gold loans each contribute 13 per cent to the overall co-lending portfolio. Secured MSME loans, including loan against property, and vehicle loans collectively make up the remaining 20 per cent of the current co-lending book.
“Co-lending assets under management (AUM) of non-banking financial companies (NBFCs) are nearing Rs 1 trillion after more than five years since the model came into existence,” Crisil stated.
Under the co-lending framework, banks are authorised to collaborate with registered NBFCs based on prior agreements.
Looking ahead, Crisil anticipates a robust growth trajectory of 35-40 per cent annually over the medium term, driven by increasing interest from both NBFCs and banks.
“Partners may, however, redirect their focus towards other asset classes such as loans to micro, small, and medium enterprises (MSMEs) and home loans, given the higher risk weights associated with personal loans,” noted Crisil.
Senior Director at Crisil Ratings, Ajit Velonie, highlighted the mutual benefits of co-lending for NBFCs and banks, emphasizing the shared risk and rewards inherent in the model.
“For NBFCs, particularly mid-sized and smaller entities, co-lending offers access to bank funding and diversification in funding avenues, which is especially valuable in light of recent increases in risk weights for bank lending to NBFCs,” Velonie explained.
Conversely, Velonie pointed out that for banks, co-lending facilitates optimal access to niche customer segments and geographical markets, while assisting in meeting priority sector lending obligations.
(With PTI inputs)
