RBI may allow Small Finance banks to co-lend with NBFCs

New Delhi, Aug 22 (KNN) The Reserve Bank of India (RBI) may allow Small Finance Banks (SFBs) to co-lend with non-banking finance companies (NBFCs) with an objective to liberalise the scope of their activities.

It is being considered after an initial stabilisation period of five years and after a review, as per Hindu Business Line report.

This may be the next step in liberalising their scope of activities after making SFBs eligible for Authorised Dealer (AD).

To co-lend with another lender is not permissible for SFBs, presently.

Only scheduled commercial banks and NBFCs are allowed to co-lend to the priority sectors like agriculture; micro, small and medium enterprises (MSMEs), education, housing, among others.

It is reported that the central bank seems to be open to SFBs’ co-lending demand as it will increase priority sector lending (PSL), which is a focus area for both the Government and RBI.  (KNN Bureau)