Evergreening - NewNerve

The co-lending model has emerged as a significant innovation in the Indian financial landscape, aiming to bridge the credit gap and promote financial inclusion. This model involves collaboration between banks and non-banking financial companies (NBFCs), leveraging their respective strengths to offer wider access to credit for underserved segments. Stakeholders and their involvement: Banks: Contribute their robust risk management expertise, regulatory compliance, and access to low-cost funds. They typically originate the loan and conduct due diligence on borrowers. NBFCs: Bring their domain expertise in specific sectors, strong customer relationships, and agility in loan processing. They often handle customer acquisition, credit assessment, and loan servicing. Borrowers: Benefit...

In the lending ecosystem of India, there are various practices and strategies employed by financial institutions to manage their loan portfolios. One such practice that has garnered attention is "evergreening." Evergreening refers to a process wherein lenders extend new credit or provide additional funds to borrowers who are struggling to repay existing loans, primarily to maintain the appearance of a performing loan. In this article, we will explore the concept of evergreening in the Indian lending ecosystem, its implications, and the regulatory measures in place to address this practice. Understanding Evergreening It involves granting additional credit or restructuring existing loans to borrowers who are facing financial distress, often without addressing the underlying issues causin...

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Co-lending Model: A Collaborative Approach to Financial Inclusion in India, 2024

Evergreening in the Lending Ecosystem in India: Understanding the Practice and its Implications