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  • Category: Miscellaneous

    Co-lending agreement by State Bank of India.

    State Bank of India is the biggest public sector bank in India. Recently, I came across some interesting news about SBI, while watching Prof, Nageshwar on Youtube. It entered into a Co- Lending agreement with Adani Capital. The purpose of this agreement is to give loans to farmers to purchase agricultural implements. Adani Capital is a private sector non-banking finance company. SBI has more than 22000 branches all over India and is a giant in the banking sector. This giant has partnered with a pigmy NBFC. SBI has about forty-eight lakh crores of assets and it has around 1.4 crore farmers' credit accounts with an outstanding credit of nearly Rs 2 lakh crore. Adani Capital has assets worth Rs 13000 crores. As per the agreement, 80% of the loan amount is provided by the SBI and the rest by Adani Capital. Adni Capital is the sole authority to select beneficiaries and disburse the loans. What is the need for SBI to enter into an agreement with Adani Capital? Does SBI not have the capital and manpower to give loans to farmers? This is a clear case of favoritism to help Adani Capital to make use of SBI resources. Before 2014, Adani was almost a non-entity but is now the richest man in India. What political forces are behind him to lift him to such heights?
  • #755745
    This is very interesting piece share by the author and the over riding conditions are very dangerous and the SBI seems to have no access nor decision making while sanctioning the loan and Adani group would be making the hay while sun shines. I do not see any political force in this deal however Adani group has been developing leaps and bounds and having closeness with the ruling party the meeting with SBI must have facilitated this kind of co-lending agreement. As far the farmers gets the agricultural implements it is very good, but how about the loan repayment. Does the group taking the pledge to collect the loan amount instalment and depositing to the SBI. Soon there would be voices against this agreement and the opposition would even say that SBI was sold to Adani group to manage the whooping funds as loans.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #755755
    After reading this post from KVRR Sir, the first question which comes to my mind is: ''Who is Professor Nageshwar"? By any chance, is he that Naxalite Nageshwar Rao, who used to make meaningless, illogical, ridiculous statements in Arnob Goswami's programme and was regularly heckled by Goswami?

    If, by any chance, he is that Nageshwar Rao, then I don't give any importance to what he says or uploads.

    “Khamosh rahoon toh mushkil hain, keh doon toh shikayat hoti hain" (It is difficult to remain silent; But if I speak, they complain.) --------- Saba Afghani

  • #755760
    State bank of India in a statement said that they are interested in working with more NBFCs. It is not an exclusive offer to the Adani group. If any other NBFC is willing to partner with the same, they are ready to do that. As per the statement given by SBI, this is to expand their customer base. This will enable SBI to get connected with the underserved farming segment of the country. Shortly, some more NBFCs may also make a similar agreement with SBI. If all this work is to be done by SBI alone, they may have to increase their manpower which may cost them more money.
    Co-lending schemes for banks and NBFCs are covered by RBI guidelines. The whole work will be as per the guidelines given by RBI only.

    always confident

  • #755762
    Partha Sir, Professor K. Nageshwar is a Graduate of Electronics, Post Graduate in Journalism, Ph.D. in Political Science from Osmania University, Hyderabad. He is a visiting Professor at the Birla Institute of Technology and Science, Pilani, National Academy of Administration, Mussorie, National Police Academy, and many other institutes. He served as a Member of the Legislative Council of Telangana.

    Here the important thing is not who is Mr.Nageshwar, but the facts mentioned by him.

    " Be Good and Do Good "

  • #755772
    This matter is not anew concept by the present Modi government.
    This was a RBI policy enisaged in 2018.
    I quote from Indian Express..."The primary focus of the revised scheme, rechristened as 'Co-Lending Model' (CLM), was to "improve the flow of credit to the unserved and underserved sector of the economy and make available funds to the ultimate beneficiary at an affordable cost, considering the lower cost of funds from banks and greater reach of the NBFCs","

    SBI is not alone in this tie-up. Many other banks including private sector banks also had similar ties ups with other Non-Banking finance entities.

    To se red in anything connected with (only ) the Ambani s, Adani s etc. is the result of the jaundiced vision of the anti-Modi/anti-BJP groups. The communist practice this kind of biased approach in Kerala. When they are the ruling party, they enter into tie ups with private players, even from abroad, but oppose and resort to disruptions and agitations on similar or better ones when resorted by NDA government or Congress governments.

  • #755778
    Thanks to Venkiteswaran Sir. I didn't know these details. Now, I understand this issue a little bit.
    “Khamosh rahoon toh mushkil hain, keh doon toh shikayat hoti hain" (It is difficult to remain silent; But if I speak, they complain.) --------- Saba Afghani

  • #755781
    Mr. Venkiteswaran is quoting from an article written by George Mathew dated 14-12-2021, in Indian Express. The article is titled "Bank-NBFC co-lending: how it works, and THE CONCERNS IT RAISES." The Reserve Bank of India policy announced in 2018 is called "Co-origination of loans by banks and NBFC s for lending to priority sector". Co-lending by banks and NBFCs is introduced in November 2020. The article clearly mentions unusual tie-ups like the one between the SBI and Adani Capital. The RBI says, from the feedback it received, that NBFCs are given more operational flexibility while requiring them to conform to regulatory guidelines. The scheme is rechristened as Co- lending by banks and NBFCs.
    "Interestingly, the RBI guidelines provide for the NBFCs to be the single point of interface for customers, and to enter into loan agreements with borrowers, which should lay down the features of the arrangement and the roles and responsibilities of the NBFCs and banks. In effect, while the banks fund the major chunk of the loan, the NBFC decides the borrower."
    The RBI hasn't officially allowed the entry of big corporate houses into the banking sector. NBFCs which are mostly started and run by corporate houses were already accepting public deposits. They now have more opportunities on the lending side through co-lending arrangements.
    NBFCs like Infrastructure Leasing & Financial Services Limited (IL&FS), Dewan Housing Finance Corporation Limited (DHFL), Srei Infrastructure Finance Limited(SREI), and Reliance Capital collected funds from the public through fixed deposits and non-convertible debentures, have collapsed in the last three years under the strict monitoring by the RBI. Collectively, these firms owe around Rs 1 lakh crore to investors. At a time like this, the RBI has brought in a Co-lending system with banks and NBFCs. For whose benefit this policy is brought forward?

    Mr. Venkiteswaran failed to read the subsequent paragraphs in the article or forgot to mention them.No doubt SBI is not alone in this sort of tie-ups. The audacity to call people who point out these facts as jaundice visioned and anti- Modi is really saddening as people are not understanding the real purpose behind such policies.

    " Be Good and Do Good "

  • #755795
    I have not stated on the actual result or effect of the co-lending. I just wanted to point out the ones sided opposition by people who have their own favourite or opposing side is not correct.

    For any new project or programme there can be a subsequent review and feed back evaluation. At that time the decision whether it was good or bad or effective would be analyzed based on data and goals.

    When the matter is evaluated factually based on empirical data, then even the RBI may take suitable action. But just because it was Ambani or Adani, or it was during Modi government time, we need not oppose. That was my view.

  • #755806
    When a policy is implemented to benefit a particular section, one need not wait for the result to review and take action. The damage will be done by the time review is taken up. There was a proposal by this government to make the account holders of the bank responsible for the losses incurred by the bank. The proposal has to be dropped because of the opposition it received from all quarters. Remember, any agenda-ridden policy will do the damage before it can be abandoned or reviewed and rectified. Whose money these banks are doing business with? It is the public money. Do these banks not have the manpower to reach out to the priority sectors? Do they need these NBFCs with small capital and limited staff? The major risk is to the banks. Already we have very big non-performing assets with these banks. The culprits are still at large. Is there any need to add more NPAs? It is not about only Adanis or such tribes. This is about all people like that.
    " Be Good and Do Good "

  • #755888
    State Bank is a big entity and it might not require collaboration with any other agency for the purpose of loan disbursement and management. It can do it alone as it was doing in the past. Now when we are moving towards modernisation and liberalisation in our economic policies then it makes sense to experiment by collaborating between Govt/PSU and private entities for extending the benefits to a larger cross-section of the society. If that is the intention behind this co-lending agreement between SBI and Adani group then there is nothing wrong with it and we should not be alarmed because it has started with Adani group. If this becomes a viable and successful model then more such collaborations would be there.
    Knowledge is power.

  • #755893
    The co-lending policy of banks and NBFCs is welcome when the stake of the NBFC is more than the bank. Here the bank gives 80% and NBFC's stake is 20%. The funny part of this system is that selection of beneficiaries, the terms and the conditions of the loan, and disbursement are entirely at the discretion of NBFCs. Why do members supporting this arrangement think of all this?
    The NBFCs decide where to buy the implements and end up mopping up the commissions and discounts, This reduces their stake further. This is a cleverly camouflaged arrangement to benefit the NBFCs.

    " Be Good and Do Good "

  • #756009
    Though the SBI is the big entity of national repute and not require any collaboration or any other help for loan disbursement and it has its own expertise and recovery method and would not allow single paise to drift because it has many branches to disburse and recover the loans that were given. Even there is debt recovery tribunal working independently to recover the long over dues Now that India is opening up to help big projects there is nothing wrong to coordinate and cooperate with the private players. But how far the State Bank is to gain with the Co- lending model is to be seen and believed. Why I am saying this because for just 31 paise balance recovery the SBI in Gujarat has not given a no due certificate to a farmer who wants to purchase a land. If SBI working so strict on loans and recoveries the author and other members need not have the apprehensions.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

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