Edelweiss joins SBI for Co-Origination of loans to MSMEs

Edelweiss Financial Services Limited on Thursday has informed the exchange that its subsidiary ECL Finance Limited has signed a Co-Origination agreement with State Bank of India (SBI), India's largest bank, to increase access to credit for Micro, Small and Medium Enterprises (MSMEs).

Following Reserve Bank of India's (RBI) guidelines on co-origination of loans by banks and NBFCs, the coalition aims to leverage combined presence in tier II and tier III markets to ensure timely disbursal of credit to MSMEs.

This collaboration is a win-win situation for both the banks and the NBFCs as it involves the sharing of risks and rewards between them, channeling credit flows to an important socio-economic segment. The partnership between SBI and Edelweiss has just come up after SBI set up a special NBFC Alliance department to step up lending to the priority sector.

Speaking on the announcement, Mr. P. K. Gupta, Digital & Retail Banking, SBI said, "The partnership will boost credit availability to the MSME community, which contributes substantially to the GDP. The wide reach of SBI will give access to cost effective loans to the MSME sector in non-metros."

SBI brings capital flows at low costs, which when combined with Edelweiss' expertise, would be able to meet the credit needs of MSME customers. For MSME customers, this translates into easy access to credit at lower rates, given a specialized blended rate of interest.

Rashesh Shah, Chairman & CEO of Edelweiss Group said, “Edelweiss and SBI are collaborating to make reasonably priced credit accessible for the priority sector segment.”

Mr. Deepak Mittal, MD & CEO, ECL Finance added, "This collaboration will help both SBI and Edelweiss leverage their respective strengths on customer acquisition, credit assessment and state-of-art technology, to bring down cost of credit for the MSME sector substantially."

This collaboration is the third Co-Origination MoU for Edelweiss, after the Bank of Baroda and Central Bank of India.

On Friday, shares of Edelweiss Financial Services Ltd. opened at Rs. 106.25 compared to its previous close of Rs. 104.95. The stock hit an intraday high of Rs. 106.25 and intraday low of 104.85. It was last trading in BSE at Rs. 105.20, up by 0.24 per cent on BSE.

Meanwhile, shares of State Bank of India opened at  Rs. 275.37 compared to previous close of Rs. 273.15 on BSE. The stock hit an intraday high of Rs. 276.50 and intraday low of Rs. 274.95. At 1000 hours, the stock was trading at Rs. 276.85, with an increase of 1.35 per cent.