State Bank of India (SBI) on Wednesday said it has entered into a co-lending agreement with fintech firm U GRO Capital in line with the Reserve Bank of India’s (RBI) guidelines.

In November last year, RBI had announced a co-lending model (CLM) scheme for banks to partner with non-banking finance companies (NBFCs) to provide loans to priority sector borrowers at an affordable cost. The idea is to give lenders greater flexibility, RBI had said in its official statement. “The co-lending model aims to give the borrower the best interest rate and better reach,” SBI said in its statement.

With the tie-up, SBI aims to offer strategic financing solutions to the unserved medium, small and micro enterprises (MSMEs). The country’s largest lender said it is actively looking at co-lending opportunities with multiple NBFCs through their products for financing the MSMEs and to enhance last mile connect. “This initiative will financially empower MSMEs and further drive financial inclusion in the country,” SBI said in its statement.

“We are glad to have joined hands with U GRO Capital under the co-lending program. This collaboration will further enhance our distribution network, as we aim to extend our credit reach to more MSMEs. Such partnerships align with our commitment to accelerate effective and affordable credit to MSMEs in India and contribute to the country’s financial inclusion imperative towards building an Atmanirbhar Bharat,” Dinesh Khara, Chairman, SBI.

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