Union bank

Co-loan with NBFCs to feed the Union Bank portfolio

Union Bank of India, which expects its retail and MSME portfolio to grow by at least 7,000 crore next year as part of the lending partnership with non-bank financial companies, has set up a dedicated branch to sanction loans within 24 hours.

“We are developing specific products adapted to the co-loan model… We already have three mergers with NBFCs. We’re looking at two or three more, ”said Rajkiran Rai G, Managing Director and CEO of UBI, at the FICCI-IBA Banking Summit.

NBFCs are more efficient at sourcing, lending, and collecting, while banks have cheaper funds. It is therefore a win-win partnership, he added.

“We envision a portfolio (of loans to individuals and MSMEs combined) of at least 7,000 crore to 8,000 crore next year.

“This year we’re going to refine the products and get the right model. It is another model, which does not compete with our usual business, ”said Rai.

There are several issues including the alignment of loan models, assessments, eligibility standards that we need to fix, he explained.

RBI had unveiled a revised CLM in November 2020 to improve the flow of credit to the unserved and underserved sector of the economy. CLM’s goal is to make funds available to the end recipient at an affordable cost, given the lower cost of funds for banks and greater reach of NBFCs.