Financial inclusion has been a long-standing issue in India, with a significant portion of the population still lacking access to formal banking services. Despite being one of the fastest- growing economies in the world, India still has a large unbanked population, particularly in rural areas. To bridge this gap, several measures have been taken by the government, including the launch of several financial inclusion programs. The Reserve Bank of India has also come up with co-lending norms to improve the flow of credit to borrowers in the priority sector. Keeping this in mind, a recent partnership between MAG Finserv Company Limited and the Central Bank of India is set to bring financial inclusion to the forefront.
MAG Finserv is a non-banking financial company (NBFC) that provides a range of financial products and services to individuals and businesses. The company was established over a decade and a half ago, and since then it has assisted over lakh customers in overcoming their financial obstacles. Over the years, MAG Finserv has developed strong relationships with its employees, customers, and associates, and it is guided by a culture of passion for people, enriching its employees, a customer-first approach, partnerships that empower, and unwavering social commitment.
The company was acquired by its promoter in 2006, and within five years of its acquisition, ten new branches were opened and the assets under management (AUM) rose to INR 155 lakhs from INR 28 lakhs previously. In 2015, the long-term strategic planning of the promoter helped the company reach the INR 4080 lakhs milestone, and in 2020, it extended its services beyond the state of Maharashtra and opened three new branches in Karnataka. Despite the challenges posed by the pandemic, the company experienced concrete growth in its AUM, which reached INR 128.9 Crore in 2021.
MAG Finserv’s vision is to establish its presence pan-India and set up for success to launch globally, and its mission is to work with a strategic focus on excellent quality, affordable cost, timely delivery, and complete customer satisfaction. The company’s goal is to achieve 0% NPA and ensure a sustainable economic future.
The company is passionate about people and has a holistic approach to their lives, and it invests continuously in its employees through talent nurturing and reward programs. Its customer-first approach ensures that it gives equal value and dedication to all, regardless of their background, and it has established partnerships that empower the organization. Additionally, MAG Finserv has an unwavering social commitment and has been actively involved in socio-economic upliftment, which has benefited many.
On the other hand, the Central Bank of India is one of the largest public sector banks in India with a history dating back over a hundred years. It was established in 1911, making it the first Indian commercial bank entirely managed by Indians. The bank was founded with the aim of providing financial services to the common man and promoting economic growth in India.
It is a well-established and respected public sector bank in India, with a strong focus on providing financial services to the common man and promoting economic growth in the country. With its extensive network of branches and commitment to innovation, the bank is well-positioned to continue serving its customers and contributing to the growth of the Indian economy.
MAG Finserv Company Limited is a growing non-systemically important non-deposit-taking NBFC registered with the Reserve Bank of India, while the Central Bank of India is one of the leading public sector banks in India. The two entities have entered into a first-of-its-kind co-lending partnership to offer gold loans against gold ornaments/ jewelry under the priority sector to borrowers at competitive rates. This partnership is set to bring about a significant change in the financial landscape of India.
In this co-lending partnership, MAG Finserv Company Limited will originate and process loans against gold ornaments/ jewelry as per the mutually formulated credit parameters and eligibility criteria between the two entities. Central Bank of India will take into its books 80% of the gold loan generated by the co-lending arrangement while the remaining 20% will be funded by MAG Finserv Company Limited as per the mutually agreed terms. This arrangement between the bank and the company will help extend credit to the priority sector and promote financial inclusion as per the Reserve Bank of India’s co-lending norms.
The co-lending partnership will help both the company and the bank enhance their gold loan portfolio across the country while providing hassle-free customized lending of gold loans to MSME customers (individual and proprietorship firms only) and agriculturists. This partnership will enable the bank to leverage its low cost of funds and credit assessment expertise, while the company brings its rule engine-based loan origination for sourcing, servicing, and recovery of loans.
The company has achieved substantial scale in the last few years, despite the hit of the global pandemic. It has made significant progress, with 45+ branches in Maharashtra and Karnataka
The potential impact of a partnership between MAG Finserv and the Central Bank of India on financial literacy and financial health of people could be significant, depending on the specific goals and initiatives of the partnership this could help individuals make more informed financial decisions and improve their overall financial health.
If the partnership is focused on financial access, it could provide people with more options for financial products and services, such as loans, savings accounts, and insurance, which could help them achieve their financial goals.
Additionally, the partnership could leverage the strengths of both institutions to provide customized financial solutions for various segments of the population, such as farmers, small business owners, and women, who may face unique financial challenges.
Overall, the partnership between MAG Finserv and the Central Bank of India has the potential to make a positive impact by providing people with the resources and support they need to improve their financial well-being. The lack of access to financial services in rural areas presents both challenges and opportunities for financial service providers. While it can be difficult to provide financial services in these areas, there are also significant opportunities for growth and expansion. Financial service providers that are able to effectively address these challenges and take advantage of these opportunities will be well-positioned to succeed in these untapped markets.
This partnership can be a significant milestone in the financial sector of rural India. This unique co-lending partnership will bring financial inclusion to the forefront by providing access to formal banking services to a large portion of the unbanked population, particularly in economically backward village areas. With MAG Finserv’s expertise in loan origination and the Central Bank of India’s extensive network and low cost of funds, this partnership has the potential to make a positive impact on the financial literacy and financial health of people across the country. The future of this partnership looks promising, and we hope to see its positive effects on the financial landscape of India in the years to come.