In a recent report by Crisil Ratings, the co-lending model is poised to reach Rs 1 lakh crore in assets under management (AUM). However, the landscape is evolving, with potential impacts from RBI regulations on personal loan growth.
As per Crisil’s analysis, the co-lending portfolios across various asset classes are on the brink of significant expansion. Yet, the pace of personal loan growth may slow down due to regulatory constraints.
One key regulatory change is the revision in risk weights for unsecured consumer credit, increasing from 100 per cent to 125 per cent. This adjustment is expected to moderate the growth of unsecured loans in the upcoming fiscal year, potentially affecting personal loan growth rates.
Malvika Bhotika, Director at Crisil Ratings, suggests a potential shift in the composition of co-lending portfolios. She anticipates a decline in the share of personal loans, with a possible uptick in loans to micro, small, and medium enterprises (MSMEs) and home loans.
Ajit Velonie, Senior Director at Crisil Ratings, highlights the mutual benefits of the co-lending model for non-banking financial companies (NBFCs) and banks. NBFCs gain access to diverse funding sources, while banks meet priority sector lending requirements and tap into niche markets.
Looking ahead, industry participants may pivot towards MSME loans and home loans, considering the higher risk weights associated with personal loans. However, sustaining asset quality remains paramount for long-term success.
In conclusion, monitoring the evolving regulatory landscape and adapting strategies accordingly will be essential for navigating the co-lending space effectively.
