SBI Unveils Its First Co-Lending CPC

Shri. Surender Rana DMD (ASF), SBI inaugurated State Bank of India’s first co-lending Centralised Processing Cell (CPC) at Nariman Point, Mumbai. The CPC is a dedicated unit for co-lending business of NBFCs.

In order to have seamless operations of specialized activity under Co-lending, a dedicated Centralised Processing Cell (CPC) for Processing & Sanctioning of Loans is setup by the Banks.

The NBFCs under the Co-Lending Model sources the loan proposals from all locations in India and forwards to the Bank from their Centralized Location. On behalf of the Bank, CPC undertakes Loan proposals Acceptance, Disbursement, Monitoring and Reconciliation.

The inauguration ceremony witnessed the presence of SBI dignitaries, Shree. Shantanu Pendsey CGM (ABU & GSS) and Smt. Salila Pande CGM MMR. Other dignitaries from the corporate centre and NBFC teams of NIDO Home Finance and Ugro Capital Ltd. were present as well.

The inauguration of co-lending CPC is a step towards demonstrating SBI’s commitment to growing its co-lending book with a focus on safety and sustainability.

This commitment is in line with SBI's ongoing efforts to support MSMEs and the under-served population where the bank has made significant strides in FY24. To strengthen support to MSMEs having little or no access to formal credit, SBI has entered into a co-lending agreement with 9 NBFCs. Further, to dedicatedly continue reaching out to the unserved and under-served populace, the bank has signed MoUs with 23 NBFCs/HFCs under co-lending model.

The inauguration of the co-lending CPC reflects SBI’s determination to grow the co-lending book in a safe way and reiterates the bank’s dedication towards welfare of MSMEs and under-served population.

Mahindra Finance Forays Into Co-Lending Space in Partnership with SBI

• Mahindra Finance enters into a co-lending partnership with State Bank of India
• Partnership to unlock the potential of Priority Sector Lending (PSL)

Mahindra Finance, part of the Mahindra Group and one of India’s leading Non-Banking Finance Company, has announced a strategic co-lending partnership with State Bank of India (SBI), India’s largest public sector bank. The co-lending model is designed to harness the distribution strength of Non-Banking Financial Companies (NBFCs) and the cost-efficient capital of banks, ensuring wider outreach and better interest rates for customers.

The partnership was launched by Ramesh Iyer, VC and MD, Mahindra Finance and the Dy Managing Director, SBI in the presence of Raul Rebello, MD and CEO – Designate, Mahindra Finance and the CGM (SME) from SBI.

Launched on a pan India level, this partnership is expected to offer affordable solutions to Mahindra Finance customers. The interest rates offered under this co-lending arrangement would be determined based on the customer's credit profile, ensuring a personalised and competitive financing experience.

Raul Rebello, MD and CEO- Designate, Mahindra Finance, said, "We are delighted to enter into this strategic co-lending arrangement with State Bank of India, India’s pioneer bank with multi-faceted experience. This collaboration is a step forward in enhancing financial accessibility and inclusivity. As we move forward, our focus remains on fostering innovation, embracing strategic collaborations, and tailoring our services to meet the evolving needs of our customers. Through this partnership we will further our capability to be a responsible financial solution partner to Emerging India.”

With Mahindra Finance strong rural distribution network and expertise in the financial sector and SBI’s competitive capital cost customers will get competitive advantage. The objective is to extend joint financial support to customers thereby enabling credit to the unserved segments of the economy at an affordable cost, marking Mahindra Finance's first co-lending tie-up with a bank. The partnership with SBI emphasises the long-term commitment of both entities towards empowering the MSME sectors. Under this agreement, Mahindra Finance will facilitate leads and manage loan servicing while serving as a single point of contact for prospective customers.

About Mahindra & Mahindra Financial Services Limited

Mahindra & Mahindra Financial Services Limited (Mahindra Finance), part of the Mahindra Group, is one of India’s leading non-banking finance companies. Focused on the rural and semi-urban sector, the company has over 9.3 million customers and has an AUM of over USD 11 Billion.

The Company is a leading vehicle and tractor financier, provides loans to SMEs and also offers fixed deposits.

The Company has 1,367 offices and reaches out to customers spread over 3,80,000 villages and 7,000 towns across the country.

Mahindra Finance has been ranked 59th among India’s Best Companies to Work 2023 by ‘Great Place to Work Institute.’

Post Covid-19: Non-bank Lending will Grow in Asia

The COVID-19 pandemic has significantly changed the psychology of average borrowers. One of the near-time effects will be the growth of non-bank lending. According to a customer survey of Robocash Group in Asia, 50% of respondents say about a higher need for financing. Moreover, the decrease in incomes during quarantine has prepared 45% for active borrowing when restrictions are lifted. At the same time, the other 9% will be motivated by the desire to satisfy their hunger for consumption.

To assess the psychological impact of the pandemic on the future credit activity of borrowers, company analysts identified nine main factors evaluating their positive and negative influence on a 5-point scale. Besides, the results of online customer surveys in the Philippines, Indonesia, Vietnam and India were taken into account.

On the background of the increased need for financing amid the pandemic due to various reasons among half of the respondents, one in four (28%) faced a real drop in income. The decline in financial wealth of the population became the main factor, which reduced the demand for all types of loans during the active phase of the quarantine. Other factors such as overall insecurity and anxiety, established habits to keep social distance and cut down on expenses have strengthened it. The effect will be long-term. Combined with tightened scoring requirements, it will also prevent a sharp surge in lending after the removal of restrictions.

However, the broader usage of digital services with the growing deferred consumption will still gradually prevail over the habits to social isolation and lower spending. The survey results confirm it. An increase in the volume of deferred expenses and the need for money has become stressful for many people. Thus, it will encourage 45% of respondents to borrow more in the post-COVID-19 period. Then, 9% of the surveyed are more likely to resume borrowing because they miss the usual spending.

Analysts of the company added: “Coronavirus has only expedited the expansion of digital and Internet services, boosting the demand for apps providing remote communications, video streaming, online shopping, etc. It has produced a solid base for the further penetration of non-cash payments and fintech.”

Although a far more complex set of factors will affect the outcome such as government policies, the state of alternative lending, the adaptation of traditional banks to the changes etc, psychological and related points allow predicting an increase in volumes for non-bank lending after the complete removal of restrictions. As the findings show, it won't be sharp but steady.