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.
Also read: How Easy Money From Banks Led NBFCs Into Crisis How To Solve The Ongoing Liquidity Crisis In NBFCs
- 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.