Page 49 - Banking Finance March 2025

ARTICLE

Co-lending benefits banks by helping them reach untapped Axis Bank and Lendingkart : Axis Bank has partnered with
markets and customers while NBFCs gain access to lower- Lendingkart to provide working capital loans to small busi-
cost funds, enhancing the overall customer experience by nesses. This partnership allows Axis Bank to leverage
improved personal touch and better interface. Lendingkart's digital lending platform and extensive reach
among small enterprises.
Examples of Co-Lending :
Yes Bank and U GRO Capital : Yes Bank teamed up with U
Union Bank of India and Capri Global Capital Limited
GRO Capital to co-lend to MSMEs. This collaboration aims
(CGCL) : Union Bank of India has partnered with several non-
to enhance credit availability to small businesses, combin-
banking financial companies (NBFCs) for co-lending. One no-
ing Yes Bank's financial strength with U GRO Capital's sec-
table partnership is with Capri Global Capital Limited (CGCL). tor-specific expertise.
This collaboration aims to provide loans to micro, small and
medium enterprises (MSMEs), leveraging Union Bank's ex- Kotak Mahindra Bank and InCred : Kotak Mahindra Bank
tensive reach and Capri Global's expertise in the MSME has a co-lending partnership with InCred to provide loans
sector.
to the education sector. This partnership helps students
access educational loans more easily, leveraging Kotak's fi-
SBFC (Small Business Finance) and ICICI Bank : One no- nancial resources and InCred's focus on education financ-
table co lending partnership is between SBFC (Small Busi- ing.
ness Finance) and ICICI Bank. This partnership allows the
two entities to join forces and provide funding to borrow- These partnerships combine the strengths of both banks and
ers who may not have been able to secure loans otherwise. NBFCs, improving credit outreach and making loans more
accessible to various sectors.
SBI and Adani Capital : The State Bank of India (SBI), the
country's largest lender, partnered with Adani Capital, a Co Lending Models
smaller NBFC, to co-lend to farmers. In this arrangement,
SBI provides 80% of the loan amount, while Adani Capital
contributes the remaining 20%. This partnership helps farm-
ers access funds to purchase tractors and farm implements,
combining the strengths of both institutions-SBI's large capi-
tal base and Adani Capital's reach to rural customers.

HDFC Bank and Apollo Finvest : HDFC Bank partnered with
Apollo Finvest to provide loans to small and medium enter-
prises (SMEs). HDFC Bank contributes 80% of the loan
amount, while Apollo Finvest provides the remaining 20%.
This collaboration helps SMEs access funds more easily. Eligibility criteria for co-lending
The eligibility criteria for co-lending arrangements typically
ICICI Bank and Indostar Capital Finance : ICICI Bank
involve the following:
teamed up with Indostar Capital Finance to co-lend to the Credit Score and History: A good credit score and a
commercial vehicle sector. This partnership allows ICICI
stable credit history are crucial. Lenders will look at
Bank to leverage Indostar's expertise in the commercial credit reports, including on-time payment history and
vehicle market while sharing the risk. credit mix, to assess the future ability to repay the loan.

Bank of Baroda and Paisalo Digital : Bank of Baroda en- Income: Stable income is necessary to ensure that bor-
tered into a co-lending agreement with Paisalo Digital to rowers have the means to repay the loan. Lenders may
have different minimum income requirements.
provide loans to micro, small and medium enterprises
(MSMEs). This partnership aims to enhance credit availabil- Debt-to-Income Ratio (DTI): This ratio represents the
ity to underserved segments. portion of a borrower's gross monthly income that goes

44 | 2025 | MARCH | BANKING FINANCE