Tech to risk perception: Co-lending model battles ‘multiple issues’

Non-banking financial companies (NBFCs) had co-lending assets under management (AUM) of nearly Rs 1 trillion more than five years after the model came into being in 2018, according to a report by CRISIL in April 2024. Co-lending is progressing but it has “multiple issues”, say industry executives.

The issues include lack of technological integration, different risk perceptions between lending partners (banks and NBFCs) and slower acceptance of the model by bigger NBFCs, said experts. It is a model where multiple lending partners enter into an arrangement to provide loans to borrowers, aiming to provide credit to sectors that have struggled to get enough of it, like micro, small and medium enterprises (MSMEs).