Commercial banks will use the network of NBFCs to reach the last mile in extending loans through loan melas.

  • The Finance Ministry had asked the public-sector banks to hold public meetings with the borrowers for extending loans in 400 districts of the country to boost demand ahead of the festive season.
  • Commercial banks will take help from the NBFCs who have reached in the hinterland.
  • Bankers said, by collaborating with them, loan growth would increase.
Co-originating loans
  • Banks have already entered into 14 tie-ups with NBFCs for co-originating loans, with another 36 such tie-ups in the pipeline.
  • But, such steps led to indiscriminate lending, which inevitably results in higher NPAs and banks eventually write-off such bad debt. That risk should be mitigated. Loans extended have to be within the bank’s framework. Banks will have to be cautious.
  • Such gatherings to extend loans will take place in two phases, one between September in 200 districts of the country and the next, in October in another 200 districts.
Also read: How Easy Money From Banks Led NBFCs Into Crisis How To Solve The Ongoing Liquidity Crisis In NBFCs