There are multiple benefits to bank such as:
To reach a wider range of borrowers:
Co-lending can help banks reach a wider range of borrowers, including those who may not qualify for a loan from a bank on their own. This is because Ugro Capital may have a different lending criteria than banks, and can lend to businesses that may not have the same financial records or assets as larger businesses.
To share expertise:
Co-lending can allow banks to share their expertise with other lenders. This can be helpful for both banks and borrowers, as it can lead to better lending decisions and more successful businesses. On other side Banks may find that Ugro has good business model in term of selecting customers and in term of collection efficiency when it comes MSME. NBFCs can be more efficient in smaller concentrated areas comparing to big banks.
To comply with regulations:
In some cases, banks may be required to co-lend with other organizations in order to comply with regulations. For example, the Small Business Administration (SBA) requires banks to co-lend with SBA-approved lenders in order to qualify for SBA loans.
Overall, co-lending can be a beneficial arrangement for both banks and borrowers. It can help banks reduce risk, reach a wider range of borrowers, share expertise, and comply with regulations.
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