Q. Consider the following statements regarding the Co-Lending Model (CLM) and the RBI’s framework in India:
1.The co-lending model allows banks to collaborate with NBFCs to jointly lend to priority sector borrowers.
2.The co-lending model is applicable only to large NBFCs with an asset size of more than ₹500 crore.
3.The co-lending framework aims to improve credit flow to underserved sectors and enhance financial inclusion.
How many of the above statements are correct?
Explanation: 1 and 3 are correct
Statement 1 is correct: Co-lending: It is a brilliant example of financial teamwork where two financial institutions, like a big bank and an NBFC, team up to give out loans together. The CLM permits banks (excluding RRBs, UCBs, and SFBs) to co-lend with NBFCs (including HFCs), especially to the priority sector, to enhance credit access.
Statement 2 is incorrect: There is no such restriction in the RBI framework that limits co-lending only to NBFCs with assets over ₹500 crore. The guidelines apply generally to all NBFCs and HFCs, subject to their regulatory compliance.
Statement 3 is correct: The framework aims to improve last-mile credit delivery, particularly in the priority sector like agriculture, MSMEs, housing, etc., thereby promoting financial inclusion.
Source: ET
