New Delhi, Oct 13 (PTI) Fintech startup Finezza on Thursday said it will soon launch a co-lending management solution platform aiming at reducing operational challenges and cost for banks.

The platform will enable banks and Non-Banking Financial Institutions (NBFCs) to easily manage their assets co-lent to the priority sector in the RBI-approved 80:20 format, where NBFCs have to fund at least 20 per cent of the loan amount and banks have to fund the rest.

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In a statement, Finezza said this would be a 'first-ever platform of its kind' and will soon be co-lending ready.

"With the platform in place, the bank will know accurately about the health of its assets, the NBFC will know accurately about the health of its assets, and how much it owes to each of the co-lending partners. The market opportunity for co-lending models is in the range of USD 350-500 billion," Finezza CEO Krishnan Iyer said.

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To push lending in priority sectors, including rural areas, renewable energy, students, low-cost housing customers and MSMEs, the Reserve Bank of India (RBI) had introduced the co-lending model in 2020. The process solves the problem of access to funds for the NBFCs, increases reach in the priority sectors for the banks and makes credit available at affordable terms to borrowers.

In a co-lending arrangement, most of the capital to fund the loan comes from the banking partner who offers the money at a lesser rate compared to the NBFC. However, the onus of originating the loan, servicing the customer, and recovering the loan amount lies with the NBFC.

The company said while operationalising the co-lending concept at scale, challenges arise when bifurcating the principal, rate of interest (ROI) and other components like the processing fee, penal interest, and so on, after the loan is recovered. The operational complexity increases even further if an NBFC is working with multiple co-lending partners.

Finezza's loan management system will help clients -- banks and NBFCs -- manage the co-lending partnerships, set up and maintain the co-lending terms, thereby, solving the operational challenges and expenditure that co-lending brings along with it, it added.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)