The United Bank of India has partnered Srei Equipment Finance for co-lending to micro, small and medium enterprises and the agriculture sector. Under the arrangement, UBI will leverage its low cost of funds to co-originate and co-lend the loan with Srei Equipment Finance at a mutually agreed ratio. “The basic advantage is that the bank has a low cost of funds compared with high cost for NBFCs. While the cost of funds for UBI in the second quarter of 2018-19 was 5.06 per cent, it was 9.3 per cent for Srei Equipment Finance during the quarter ended September 30, 2018. Based on the respective interest rate and proportion of risk sharing, a single blended interest rate should be offered to the borrower in the case of a fixed rate.

Source: The Telegraph January 04, 2019 19:41 UTC