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The Reserve Bank of India (RBI) brought out a notification on the co-lending model which has to be incorporated between banks and NBFCs. This notification was brought out through RBI/2020-21/63 FIDD.CO.Plan.BC.No.8/04.09.01/2020-21 on 05 November 2020. The main objective of this notification is to increase the collaboration between banks and NBFCs when it comes to areas of lending in the priority sector. Through this notification, the government plans to create effective harmonisation of loans in several sectors. This notification is related to the co-origination of loans brought out by different banks and NBFCs in the priority sector.
The Co-Lending model is a binding agreement between the parties of the contract. The terms of the agreement have to be negotiated in advance before entering into the contract.
This co-lending model would apply to the following institutions:
Some of the main objectives of the Co-Lending Model are:
The RBI brought out this Co-lending scheme with a view to increasing lending terms between banks and NBFCs.
The following are the features of the Co-Lending Model:
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