Mumbai, February 9: In a bid to facilitate loans to micro, small and medium enterprises (MSMEs), the state-owned Bank of Maharashtra inked a pact with LoanTap Credit on Monday. In a statement, the Bank said that it has entered into a co-lending agreement with the Pune-based non-banking financial company LoanTap Credit Products to help MSMEs in loans. Under the co-lending model, the bank will have an exposure of up to 80 percent while the rest will be borne by the LoanTap, the bank said in a release.

Bank of Maharashtra managing director and CEO AS Rajeev said that the co-lending is the system introduced by RBI in the wake of the liquidity crisis at non-banking finance companies. This is done to enhance the credit flow to the unserved and underserved sector and make available funds to the ultimate beneficiary at an affordable cost.

The RBI in September 2018, RBI had come out with a co-origination model between banks and NBFCs for providing credit to the priority sector. Last year in November, RBI rechristened the scheme as Co-Lending Model (CLM), and revised the terms to provide greater operational flexibility to the lending institutions.

BoM's executive director Hemant Tamta said the co-lending model shall help the bank to meet the priority sector lending target. It will be beneficial for all NBFCs having wider outreach and customers, who will be facilitated with low cost credit from banks.

The co-lending model provides ease of loan sanctions at borrower's convenience through digital lending platforms, which cover end-to-end loan processing cycle without manual intervention, from on-boarding of customers to loan disbursement and monitoring.