What are the benefits of the Co-lending model?

What are the benefits of the Co-lending model?

What are the benefits of the Co-lending model?
The concept of co-lending has existed over the years, however, since the RBI has laid out the framework for co-origination of loans, banks …

The concept of co-lending has existed over the years, however, since the RBI has laid out the framework for co-origination of loans, banks and NBFCs are coming together to make funds available to the priority sector. 

Banks have the funds while NBFCs have the reach. A co-lending model enables traditional banks to give out substantially higher amounts of funds while using the working model of fintech for a greater digital reach. A co-lending model proves to be symbiotic in nature for both banks and NBFCs as it will help fill the gaps in the lending segment. It is an effective model as it ensures the use of robust technology to simplify the operational challenges faced by traditional lending models. 

While the benefits of a co-lending model are many, enlisted here are the prominent ones ..

Improved Technology 
Financial institutions have moved digital in order to improve the quality of services and ensure that money not only reaches the ones in need but also at the right time. Using robust technology has enabled improved turnaround time for almost all the processes right from Application to disbursal and deliver the services in real time. 

Easy access to funds 
Using the digital approach in the lending processes helps make the funds easily available to the ones in most need of it. Loans today are available on easy to use, customer friendly  and convenient personal loan apps; that too just a few clicks aways. All one requires is a smartphone and 5 minutes of time. So for consumers, it is the best of both worlds, as both digital channels and physical branches are available when a digital lender and bank come together under a co-lending model.

Lower costs 
The co-lending model is usually established to cater to the needs of the priority sector and to push credit through the economy. A variety of products can be served at lower interest rates to these customers. Thanks to technology led algorithms brought in by digital lenders, , the cost of acquiring customers and providing them what they need is also substantially lower. Additionally, the lower cost of capital brought in by banks further lowers the overall cost, the benefit of which can be passed on to the borrowers.

Expanded Reach 
As against traditional lending techniques, FinTechs use digital platforms to enhance their reach to potential customers. This helps cater to the needs of borrowers across multiple geographies. A co-lending model helps fuel the economically weaker strata with the funds they require. 

Paperless Processes 
The entire process being automated, borrowers can get access to funds from the comfort of homes. Application to disbursal can all be carried out at your fingertips. Initially, verification processes had to be carried out manually, however, new age lenders have adopted eKYC and Video KYC to simplify the process further. This drastically reduces the time and human effort that would be consumed otherwise. 

Bank of Maharashtra (BOM) and LoanTap have recently tied-up for strategic co-lending to the MSMEs. This model ensures borrower’s convenience right from on-boarding of customers to loan disbursement and monitoring. The initiative aims at providing a hassle free and easy process to those customers who are looking forward to avail a loan to fund their businesses with an MSME loan. 

Download LoanTap’s Instant Loan App: Google Playstore / Apple App Store

Total notes of this article: 22315 in 5602 rating

Ranking: 4 - 5602 vote
Click on stars to rate this article

New Posts

5 useful MSME loan tips for young entrepreneurs in India to manage overhead expenses

5 useful MSME loan tips for young entrepreneurs in...

India has well established itself as a growing market in the world attracting investors from several countries. India holds an immense part of this...

Related posts

Get a business loan in Chandigarh in just a few steps

Get a business loan in Chandigarh in just a few...

Chandigarh is the most-planned city in India. It boasts world-class architecture and modern India. Designed by a Swiss architect, this city is also …

Types Of Small Scale Businesses that Opt for Business Loan With LoanTap

Types Of Small Scale Businesses that Opt for...

Small scale businesses are those that employ low amounts of capital. These companies are labour intensive and are a source of employment for the...

Small business loans for rural areas, villages, small towns in India

Small business loans for rural areas, villages,...

Running a business without enough investment is similar to raising a child without enough nutrition. Every small and medium business needs funding for...

Get  MSME Loan With Loantap On Best Repayment Option

Get MSME Loan With Loantap On Best Repayment...

Micro, Small, and Medium Enterprises (MSME) are divided into two categories:

LoanTap offers MSME loans for new businesses.  Check the eligibility for an MSME loan and apply in a few steps

LoanTap offers MSME loans for new businesses. ...

MSME businesses are an important part of India’s growing economy. Micro, Small, and Medium Businesses are the country’s largest employment providers....

You did not use the site, Click here to remain logged. Timeout: 60 second