Central Bank of India Tie-Up SME Lending Agreement

By admin • October 21st, 2010

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The Central Bank of India and non-banking finance company Bajaj Finance Ltd are set to arrange solutions for co-finance of retail and SME loans.

The arrangement would see Bajaj Finance Ltd underwrite, prospect and service the loans and passing on a fixed share every month to the Central Bank of India for a fee. This type to tie-up is a first of its kind in this industry and is said to be beneficial as it will utilise the strengths of both parties.

The chairman of Bajaj Finance Ltd said this move ‘demonstrates a growing synergy between banks and NBFCs to partner together to leverage each other’s strengths and efficiencies’. The chairman also said their estimate would be to assign Rs 1,000 crore of co-financed loans over the next 18 months.30% of the loans to SMEs and 35% of mortgages will be assigned to the Central Bank.

The Central Bank of India has previously lead the way in innovative and unique banking activities including the introduction of Home Savings Safe Deposit Scheme, Safe Deposit Locker facility and the Recurring Deposit Scheme. Even after the bank was nationalisation in 1969, it kept on introducing innovative banking services.

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