small finance bank ,small finance bankseeking approval from the regulator to enter on-borrowA growing practice where non-bank financial companies are gaining an advantage over traditional lenders.

These banks have written reserve Bank of India to allow them to work with the big banks and NBFCBecause they have the product and reach, but they are at a loss when it comes to resources, said two people familiar with the matter.

Bankers said allowing further lending to SFBs would help level the playing field.

In several individual representations to the central bank, SFBs have submitted that co-lending will allow them to diversify risk, especially micro credithelp last mile credit delivery And release liquidity for further credit growth.

“Many requests have been made reserve Bank of India To allow small finance banks to participate in co-lending business. We hope the regulator will look at this request positively,” said the CEO of an SFB, which has made such a request to the banking regulator. “Allowing us to be involved in this model will help us reduce credit risk and is an excellent opportunity to grow the book.”

RBI did not respond to a request for comment till press time on Sunday. In the case of co-lending, while NBFCs hold 20% of the loans in their accounts, 80% of the balance goes to fund the bank’s balance sheet with credit risk on that portion.