What is consortium lending?

What is consortium lending?

Consortium: An Overview. In the financial world, a consortium refers to several lending institutions that group together to jointly finance a single borrower. These multiple banking arrangements are very similar to a loan syndication, although there are structural and operational differences between the two.

What is the difference between consortium and syndicate?

is that syndicate is a group of individuals or companies formed to transact some specific business, or to promote a common interest; a self-coordinating group while consortium is an association or combination of businesses, financial institutions, or investors, for the purpose of engaging in a joint venture.

What is the difference between consortium and multiple banking?

Under consortium financing, several banks (or financial institutions) finance a single borrower with common appraisal, common documentation, joint supervision and follow-up exercises, but in multiple banking, different banks provide finance and different banking facilities to a single borrower without having a common …

What does PSL mean in banking?

Introduction to Priority Sector Lending (PSL) Priority Sectors Lending is the role exercised by the RBI to banks, imploring them to dedicate funds for specific sectors of the economy like agriculture and allied activities, education and housing and food for the poorer population.

What is a consortium fund?

Introduction to Consortiums. A consortium is defined as an association of two or more organizations that have come together to jointly fund research projects through external funds and pooled membership fees.

What is a consortium of banks?

A consortium bank is a bank created by numerous banks to fund a project that is too large for one bank to do alone. A loan syndicate is similar to a consortium, but it is usually in reference to an extension of a loan, particularly involving international transactions and multiple currencies.

Is PSL mandatory?

Public sector lending (PSL) is mandated by the Reserve Bank of India (RBI), making it a requirement for domestic and foreign banks to offer loans to specific sectors and sub-sectors within the nation’s economy.

What is non PSL?

Non-Priority Sector lending is the sector towards which financial institutions are always ready to lend credit. It attracts finance every time. It covers all the remaining sectors which are other than PSL.

What are the advantages of consortium?

The consortium approach is advantageous because it allows stakeholders to leverage their combined resources, and industry expertise, to reach a wider audience and achieve more significant results.

What is the purpose of a consortium?

A consortium is an alliance of companies, individuals, or other entities that got together to achieve a specific objective. The objective benefits all the parties. Examples include lobbying for regulatory changes, bidding on a large project, or increasing partners’ purchasing power to get better deals.

Who comes under PSL?

The sub-target sectors of PSL include agriculture, which should account for 18% of the total (with a caveat that 8% of that goes to small farmers), and 7.5% should go to small businesses. This is the statute for all domestic banks and for foreign banks (with national ties) with 20 branches or more.