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Loan Management

What is Co-Lending and How will NBFCs Benefit From It?

• By Jayashiri Ramanathan
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With more than 1.4 billion in India, nearly 63% of the population still live in rural areas, with a significant part remaining unaware of formal financial services. Even today the LIG (Low-Income Group), the EWS (Economically Weaker Sections) categories, the priority sector (including agriculture, the micro, small, and medium enterprise (MSME) segment), and other critical sectors are finding it difficult to access the liquidity required for their daily working capital needs. 

The people in these segments contribute majorly to India’s economic growth so making financial services available to these categories is crucial. For instance, the MSME sector alone contributes about one-third of the economic growth of India, which is also expected to contribute $1 trillion to India’s exports by 2028. 

The Reserve Bank of India identified this gap faced by the MSMEs and other priority sectors and introduced a policy change of which Co-Lending is a major component. While the adoption of formal financial services has been slow in these segments, the co-lending model is preferred by these people for the ease of cash transactions.

Co-Lending: What is it? 

Co-lending is a lending arrangement where a traditional lender such as a bank , partners with a non-banking financial company (NBFC) to provide loans so that both lenders in conjunction can improve the credit flow to the underserved sectors at affordable rates. While the NBFCs ( Non-Banking Financial Companies) would do the grunt work of loan origination and paperwork, banks would offer their liquidity strength to finance a majority of the loan. This partnership creates a symbiotic relationship where both parties benefit and share the risks and rewards throughout the loan lifecycle. 

NBFCs have always benefited from their ability to pierce smaller, harder-to-reach geographical areas through the use of modern loan origination software and banking practices. Banks, on the other hand, have bigger wads of cash, and bigger fee structures. But the problem is banks were not able to reach the underserved population and the NBFCs don’t have enough cash to serve these segments. Co-lending is a give-and-take model by which NBFCs can improve their liquidity, profitability, and client base. At the same time, banks can take advantage of the market outreach, loan origination, and servicing acumen of NBFCs.

The co-lending book of NBFCs is expected to reach Rs 1 trillion by June 2024 , after more than 5 years since the model came into being. This indicates significant growth in the adoption of co-lending arrangements.

How can a Co-lending Model drive financial inclusion and economic growth?

The priority sector has ever since played a crucial role in advancing financial inclusion and the overall growth of the economy. However, the traditional lending approach followed by the banks makes it a challenge for the priority sectors to access liquidity. While NBFCs that are in close connection with this segment lack the liquidity to bridge this gap. As per statistics, bank credit growth in India will be in the range of 14-14.5% for the financial year 2024-25. These numbers highlight the potential for growth in India’s banking sector, underscoring the importance of including banks in the meaningful expansion of credit. The co-lending model acknowledges that banks dominate vast liquidity reserves and presents an opportunity to leverage this untapped potential.

On one hand, co-lending gives credit access to a higher number of individuals and business entities served by NBFCs. On the other hand, banks can utilize technology in back-end operations, KYC processes, and documentation. This enables seamless credit flow to the underserved. This means banks can extend credit to borrowers, whose loan applications would otherwise be rejected. This leads to greater financial inclusion.

Terms of a Co-Lending Arrangement

On 5th Nov 2020, RBI released a notification titled  ‘ Co-Lending by Banks and NBFCs to Priority Sector ‘ that served as a revision to the 2018 loan co-origination scheme, amended to include Housing Finance Companies (HFCs) under the umbrella term of Non-Banking Financial Companies (NBFCs). The following are some of the typical terms of the agreement between the parties,

• 80-20 split: Banks and NBFCs will usually take on an 80:20 capital deployment ratio, with NBFCs mandated to maintain at least 20% of the funding throughout the loan term. Both parties’ funds must be collected and allocated in their agreed ratio at the time of funding and at the time of repayment collections, in such a way that neither party uses the funds that belong to the other.
• Joint underwriting: As both entities are equally involved in the lending arrangement, the underwriting is also done jointly, allowing for double checks.
• Risk-return split: The 80:20 split for capital deployment also trickles down to the amount of risk and return that is split between the two entities.
• Final interest rate: Both parties can charge their own interest rates and the final interest rate charged to the customers is generally a blended interest rate, which lies between the interest rate charged individually by the bank and NBFC.
• Defined roles: Generally, the NBFC is responsible for sourcing, customer experience and management, product innovations, quick documentation, and fast turnaround time, whereas the banks are responsible for bringing in funds and establishing credibility. Risk assessment is done by both NBFC and the partner bank and the loan origination will be done by the NBFC to the customers.

How does a Co-Lending Agreement Work?

Here are the 4 steps on how Co-Lending works,

• First, the NBFC performs loan origination activities through co-lending software and checks on the prospective client, after which it recommends him/her to the partner bank with the relevant documentation. 
• The bank independently does requirement analysis and risk assessment of the client and vets him/her if found creditworthy.
• NBFCs and banks enter a tripartite agreement with customers if they meet all requirements, between lenders and borrowers.
• The bank and NBFC pool their funds into a common escrow account from which the loan shall be disbursed. Each lender allocates funds as per the pre-decided ratio in the agreement. Although both lenders will maintain the client’s accounts, they must share information and collaborate to generate a unified statement of accounts for the borrower for easier repayments.

Features of the Current Co-Lending Model

Co-lending has been adopted by various financial institutions including banks, credit unions and online lenders across the world. Sometimes,  NBFCs can also tie up with multiple banks for a distributed capital deployment; for example, the NBFC puts a 25% stake, Bank A lends 40% and Bank B gives 35% of the loan amount. 

Also when multiple lenders are involved in the lending process, the borrower’s credit will be evaluated by more than one lender. This increases the chances of approval for a loan. Also, co-lending results in a lower interest rate for the borrower as the lenders offer more competitive rates due to shared risk.

Given the higher risk weights imposed on personal loans by the Reserve Bank of India (RBI) in November 2023, there is a potential shift in focus towards other asset classes like loans to micro, small, and medium enterprises (MSME) and home loans. 

Presently, personal loans are one-third of the overall co-lending book. Housing loans (20%), unsecured MSME loans (13%), gold loans (13%), and secured MSME loans including loans against property and vehicle loans comprise the rest 20%. 

A pie chart representation of the Composition of 

Co-lending aum.

While co-lending books for all asset classes will grow, the pace of growth for personal loans is expected to be slower (25-35% in fiscal 2025) than in the recent past (~35% in fiscal 2024) due to the revision in risk weight of unsecured consumer credit to 125% from 100% . Banks are likely to be more inclined to partner with NBFCs for business loans and secured loans instead of personal loans, given the higher risk associated with unsecured personal loans. The share of personal loans could decline in fiscal 2025, with MSME and home loans expected to increase their share, supported by government initiatives .

What are the Advantages of Co-lending Model for the Lenders and Borrowers?

Advantages for nbfcs.

• Increased Reach of Co-lending model: NBFCs can leverage their expertise in niche sectors and enhance their credit flow to the people in these segments that support financial inclusion initiatives. 
• Offer Lower Interest Rates: Partnering with banks grants NBFCs access to lower-cost funds and a wider customer base. This enables NBFCs to offer competitive interest rates and customized loan products
• Credibility: For mid-sized and small NBFCs, co-lending provides access to bank funding and enables diversification, allowing them to grow in a capital-efficient manner. Also, NBFCs looking to enter the lending business can have co-lending partnerships with big banks to build credibility among the customers
• Risk Management: With the banks employing 80% of the loan capital, NBFCs can reduce the losses on their loans in case of any discrepancies.

Advantages for Banks

• Greater reach: With NBFCs’ ability to tap into the underserved sector, Banks can take advantage of this to widen their customer base and provide funds to the economically weaker strata.
• Better Customer Experience: Banks can tie up with established NBFCs to reach large audiences bridging the credit gap and instilling brand awareness.
• Risk Management: Co-lending model allows banks the flexibility to partner with one or more lenders. Hence, the risk is divided between the entities in the agreement. This adds a sense of security and minimizes the effects of loss.

Advantages for Borrowers

• Easier Access to Funds: Credit-deprived communities and people with less credit history can access formal loans easily with the co-lending model through a convenient faster disbursal process. 
• Lower Rates: Customers get access to a wide range of loan products and as multiple lenders are involved in the loan process, they get loans at lower interest rates.
• Financial Literacy: NBFCs go a step ahead by not only sourcing the loans but also educating them about the loans and conditions of the lending contract in a clear and comprehensible manner. NBFCs employ dedicated customer service teams to guide customers through the lending process. 

Present Challenges in Co-Lending:

• Banks at risk: As per the Co-Lending agreement, NBFCs only retain a 20% share in the individual loans. So the remaining 80% is borne by the banks that pose a higher risk if the borrower makes a default.
• Entry of corporates: The RBI has not yet officially allowed the entry of big corporates into the banking spaces, but the NBFCs are mostly filled with corporate houses. This may be risky as, in the past, DHFL, SREI, and Reliance Capita have collapsed regardless of strict monitoring by the RBI.
• High Risks: Defaults are typically higher for personal loans when compared to home loans or secured business loans. This creates higher risks for the lending partners that focus on personal loans. While government-sponsored schemes like the Credit Guarantee Fund Trust for Micro and Small Enterprises help lenders cover a portion of credit losses for unsecured business loans, the risks are far higher for personal loans without any collateral.

Growth in co-lending is supported by the controlled asset quality observed so far in the co-lending portfolios of banks and NBFCs. For the co-lending model to be successful in the long run, it is crucial to sustain asset quality and monitor regulatory developments related to the co-lending model.

Recent Growth and Trends

As more financial institutions realize the numerous benefits of the Co-lending model, it is expected to reach an upward trajectory in the future. The growth momentum for co-lending is projected to be healthy at 35-40% annually over the medium term, amid rising interest from both NBFCs and banks.

Going forward, the integration of co-lending with blockchain technology can provide a secure and transparent platform, making the process even more efficient, transparent, and cost-effective. The use of blockchain can reduce the risk of fraud, which increases the overall trust among lenders and borrowers. 

What’s in for the future?

With the Reserve Bank of India (RBI) tightening its vigil on the co-lending segment, lenders are expected to become more selective about the type of credit they operate in. Top public and private sector banks such as the YES Bank, State Bank of India, and Punjab National Bank have collaborated with NBFCs over the years since the co-lending model came into existence. 

With India marching towards digitization at an unprecedented pace, its liquidity issues are poised to resolve faster than usual. As the co-lending model continues to mature as the RBI intends, it will definitely be a catalyst in the financial industry to uplift the priority sector from its current economic hardships.

Role of Digital Solutions in Co-Lending

The overall efficacy of the Co-lending model depends on successful KPIs like the accuracy in risk assessment, lower cost of lending, high operational flexibility, seamless regulatory compliance , and a convenient repayment schedule. All this can be achieved only through digitization which allows for faster disbursals and ease of reconciliation. A robust digital stack with digital lending software features like CreditBureau, CYKC, Alternate data and Financial Analysis that helps in validating the document, fast decision making and quick disbursa l.

CloudBankin’s end-to-end co-lending software offers technology-driven solutions for financial institutions. It’s an all-under-one-roof fully automated solution that helps manage the entire loan lifecycle, with a loan origination system and loan management system . Unlock seamless collaboration and smarter lending with Cloudbankin’s Co-lending software —Redefine your lending process today! Book a demo !

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After smartphone penetration, people are not watching their SMS at all. They use SMS only for OTP related transactions. That’s it.

But What can a Lender see in your SMS after you consent to them? Lender can see income, expenses, and any other Fixed Obligation like (EMIs/Credit Card).

1) Income – Parameters like Average Salary Credited, Stable Monthly inflows like Rent

2) Expenses – Average monthly debit card transactions, UPI Transactions, Monthly ATM Withdrawal Amount etc

3) Fixed Obligations – Loan payments have been made for the past few months, Credit card transactions.

It also tells the Lender the adverse incidents like 1) Missed Loan payments 2) Cheque bounces 3) Missed Bill Payments like EB, LPG gas bills. 4) POS transaction declines due to insufficient funds.

A massive chunk of data is available in our SMS (more than 700 data points), which helps Lender to make a credit decision.

#lendtech   #fintech   #manispeaksmoney

An interesting insight on vehicle loans for lenders.

A trend we are seeing today – the first-hand vehicle ownership is decreasing with time. Why? People are upgrading their vehicles in every few years because of technological advances. And, this can be seen more with the millennial generation.

So, what should a lender do in terms of financing?

– Estimating the residual value of the vehicle at the start of the financing period. – Charging a borrower only for the residual value (which is the difference between the value after a few years and the current value)

Example: A bike currently is INR 1 lakh. You want to buy the vehicle for 2 years. A lender will estimate the residual value of that bike today and what it would be after 2 years. If the estimated residual value = INR 45,000, the lender will charge you only that (say, INR 55,000 with interest for this instance) during your tenure.

At the end of 2-year period, you have 3 choices: 1. Return the bike and upgrade to a new one without going through the struggle of selling it. 2. Pay the lump sum remaining amount to own the vehicle outright. 3. Extend the financing and own it by keep paying the EMIs for the remaining amount of the vehicle for the next 12 or 18 months.

Benefits for the borrowers?

– Flexibility to use a vehicle and upgrade to a new one. – Affordability to not pay for the complete value of the vehicle with the intention to use for a lesser amount of time. – Convenience in owning the vehicle.

Say goodbye to the old lending option and embrace the new way of financing for vehicle by lenders!

#vehiclefinancing   #vehicleloan   #lending   #manispeaksmoney

How many of us know this?

1) Tiktok does Lending ( is it an entertainment company or social media company or a fintech company? 2) Youtube China does Lending 3) Top 100 internet companies in China(no matter what business they are in) do Lending

The team which was heading Lending in Tiktok was the Advertisement team. If we do Ads, we do X no of revenue. But if we do lending, we’ll get X+30% more revenue. This is on the same Ad spot.

Ad team has transformed into a lending team, and in today’s world, it’s possible because the subject matter expertise can be put in as an API and given to you.

Embedded Lending as a service is becoming popular in India too, and I am happy to be part of this ecosystem.

#lendtech   #fintech   #tiktok   #manispeaksmoney

The answer is No. Only the top 10 crore people have access to many credit products in India. Almost all Banks focus on this market.

Once you go beyond that, the credit access rate has dropped significantly due to multiple factors. 1) Customers who are having low income(30-40K per month) 2) Not earning from an employer who belongs to Category A or B 3) Not from Tier 1 or 2 cities

NBFCs and Fintechs focus on the above segment, pushing another 10 crores of people.

But in India, 70 crores more people are formally or informally employed, which still needs to be tapped.

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• Co-Lending Model: Key to Winning New Market Share

In the past few months, the Indian lending ecosystem has witnessed many new pacts between banks and NBFCs. Experts believe that these co-lending/co-origination pacts will help lenders improve their credit outreach and significantly extend accessibility for many underserved borrowers in the country. 

According to a report by the Association of Chartered Certified Accountants (ACCA), the Indian MSME segment faces a credit deficit of nearly $240 Bn.

(Source: https://accaindia.co.in/contenthub/Articles/images/ACCA_june.pdf)

Another emerging challenge to Indian lenders was highlighted by the Chairman of SBI, Mr. Dinesh Khara , when he called on the banking sector to increase their green lending activities to invest in sectors like renewable energy and sustainable infrastructure, while simultaneously helping other sectors like agriculture, to mitigate the effects of climate change.

To address the challenge of the rising credit gap within the underserved economy, RBI has introduced this new model of partnership between banks and NBFCs.

In this article, we will decode the Co-Lending Model (CLM) and why it can become a key to winning more market share for Indian lenders.

What is Co-lending?

Co-lending is an arrangement where banks and non-banks (NBFCs) can form agreements and engage in priority sector lending.

In India, RBI proposed a framework for co-lending, known as the co-lending model (CLM), in 2020. According to the  master directions from RBI , financial institutions must direct 40% of all lending activities towards priority sectors as they contain many credit-starved borrowers. The list includes:

• Export Credit
• Social Infrastructure
• Renewable Energy

Although Indian banks have ample funds and can offer loans at significantly lower rates, stringent regulations and poor outreach infrastructure hamper their ability to extend credit to the unorganized segments (that also contain many borrowers in these priority sectors). NBFCs, on the other hand, due to their agile nature and less stringent regulation, enjoy greater penetration into the market.

While NBFCs usually have agile frameworks, they can still suffer from liquidity crises.

An example of such a situation was the 2018 IL&FS crisis. It was fueled primarily by the lack of asset and liability management (ALM).

The crisis was a wake-up call for many NBFCs to create an adequate pool of credit. Additionally, to ensure that there aren’t any future liquidity crises, RBI in 2019 issued guidelines for all NBFCs to build a Liquidity Risk Management Framework. It would create a more regulated flow of credit and would result in improved credibility of NBFCs.

In this next section, you will find out about requirements for banks and NBFCs to enter into the CLM.

How does co-lending work?

Banks and NBFCs were forming pacts to pursue new markets well before the introduction of CLM. Previously, RBI had released a notification on 21st Sept 2018 titled  ‘ Co-origination of loans by Banks and NBFCs for lending to priority sector ‘ highlighting rules and regulations for the parties involved in co-lending.

On 5th Nov 2020, RBI released another notification titled  ‘ Co-Lending by Banks and NBFCs to Priority Sector ‘ that served as a revision to the 2018 directions. 

Under this new version, all NBFCs (including HFCs) can enter co-lending pacts with partner banks. RBI mandated that some bank categories under Scheduled Commercial Banks (SCBs) cannot enter co-lending pacts with NBFCs. These banks include:

• Regional Rural Banks (RRBs)
• Small Finance Banks (SFBs)
• Urban Co-operative Banks (UCBs)
• Local Areas Banks (LABs) 

Here’s what you need to know about CLM 

• The bank/NBFC involved must formulate a board-approved policy that shall contain all the details regarding the exercise. The master agreement must be audited periodically, internally, and externally. The agreement must ensure adherence to the laid-out guidelines. Also, banks shall not enter a co-lending arrangement with any NBFC belonging to their promoter group. 
• 80% of the total credit risk under this model shall be on the bank’s loan book and the NBFC should bear the rest 20% of the risk. While engaging in the activity,  inter-alia , the partner bank must adhere to the outsourcing guidelines and not outsource its part of the credit sanction to the NBFC.
• The participants will pool all their funds required for lending activity within an escrow account – same for repayment.
• During the formulation of the master agreement, the bank can choose to mandatorily take their share of loans and conduct the required due diligence to check if the prospective borrower matches their risk appetite or not. Banks must conduct the screening in adherence to all EKYC and AML guidelines laid out by the RBI.
• The other arrangement is for the NBFC to disburse 100% of the loan amount and then present the case to the bank. The bank can then ‘ cherry-pick ‘ these cases and finance them accordingly. This arrangement will be akin to a  direct assignment transaction . The partner bank must adhere to the terms mentioned in the guidelines on Transactions Involving Transfer of Assets through Direct Assignment of Cash Flows and the Underlying Securities while taking the loans in its portfolio.
• A co-lender can assign loans to a third party only with consent of the other partner lenders.

Also, at any time:

• The NBFC must have the ability to generate a unified statement for any customer via the appropriate information sharing mechanisms with the partner bank.
• The interest rates charged to the borrowers will be all-inclusive interest. It means that the partner bank/NBFC can mutually decide, and charge interest based on their risk appetite.
• The lenders must disclose all the details of their arrangement upfront to the customer and take explicit consent before signing them up.
• Lenders must set up a robust grievance redressal mechanism. Any complaints against the participating entities must be resolved within 30 days. If not addressed, the borrower can escalate the issue with the concerned Banking Ombudsman/Ombudsman for NBFCs or the Customer Education and Protection Cell (CEPC) in RBI.
• Both the banks and the NBFCs must create and implement a business continuity plan to ensure uninterrupted service to their borrowers till repayment of the loans under the co-lending agreement or in the event of termination of co-lending arrangement between the co-lenders.

What are the challenges associated with CLM?

Although CLM has many benefits, there are a few challenges in the model that can reduce its efficacy. For instance, there are challenges in the way banks can undertake loans from NBFCs. We earlier mentioned that it can be done in either two ways:

• By mandatorily taking their share of loans per the guidelines from the Master agreement from the partner NBFCs and then conducting due diligence
• By choosing their share per convenience from the basket of loans that the NBFCs have financed already

If we go by the first approach, there lies a risk in increasing the overall timeline of the journey. While banks can, in theory, rely upon the NBFCs to perform required checks. But if they choose to conduct these checks themselves with their relatively stricter due diligence (which banks prefer usually to avoid bad loans), it can overturn the advantages that NBFCs bring to this partnership.

In the second approach wherein the loan takeover by the partner bank is akin to digital assignment transaction, there are many aspects that pose operational challenges for the model. In order for this partnership to become successful, banks must address these challenges first. Some of these include – adherence to direct assignment guidelines, security creation and recovery, the takeover of loans and credit enhancement.

Thus, both the partner bank and NBFC will have to shape their policies in a way to maximize the flexibility of this arrangement while keeping in mind the convenience of the borrower.

What are the benefits of CLM?

CLM brings many benefits to the lending ecosystem. For example,

• It helps improve the relationship between banks and NBFCs.
• Creates a room for NBFCs to raise funds swiftly.
• Allows banks to enjoy greater flexibility while allocating more funds to underserved markets.
• Provide greater operational flexibility and bring down the loan interest rates to increase access to credit for millions of underbanked borrowers.
• Allow HFCs to enter co-origination pacts with banks (note that this was not allowed in the 2018 version of the co-origination framework).
• Borrowers can enjoy competitive interest rates, highly affordable loans, and access to higher loan amounts.

How can Digital improve the efficacy of CLM?

Over the last two years, India’s digital infrastructure has seen many innovations such as UPI, Digi-locker, e-KYC , e-Sign, OCEN, Account Aggregators, and more that have vastly improved the odds of success for CLM.

Now, the overall efficacy of CLM depends on the achievement of KPIs such as increasing the accuracy of credit profiling, lowering the cost of borrowing, faster TATs, minimal credit risk, higher operational flexibility, convenient repayment schedule, and more. A robust digital stack can help co-lenders create a truly paperless process that will significantly bring down the overall application processing time.  

For example, LeadSquared hosts many capabilities to support co-lending needs such as:

• One time API integration to simplify the flow of data between multiple lending partners
• Rich data analytics and reporting  to give you a 360-degree view into the customer lifecycle journey
• A  Workflow Builder  to build highly flexible and agile borrower journeys in just a few clicks
• Straight Through Processing  (STP) for an end-to-end automated and completely paperless journey
• Partner Onboarding and Management for a seamless co-lending experience
• A robust Debt Recovery platform to minimize loan delinquencies and maximize collections
• Pre-screening functionality  with checks such as Aadhar, PAN, CIBIL, Experian, and more

For example, Profectus Capital , a leading Indian NBFC was able to increase its funnel quality by over 70% using pre-screening capabilities offered by LeadSquared. Also, they were able to achieve 60% higher process efficiency and optimize their spending on DSAs by nearly 55%.

A robust tech stack will ensure that banks and NBFCs can make the most of their co-lending partnership and maximize the financial inclusion of the Indian borrowers.

Before we wrap up, let us look at some of the co-lending pacts signed in 2021. 

List of Co-Lending pacts signed in 2021

2021 saw many banks (majorly public sector) and NBFCs come together to bridge the credit gap in the underserved segment.  Housing finance  and SME finance deals comprise nearly half of all new deals made in 2021. Here’s the list of the co-lending deals in 2021 so far. 

Co-lending Deals Between Banks and HFCs

• Yes Bank – PNB Housing Finance
• Yes Bank – Indiabulls Housing Finance
• Central Bank of India – Indiabulls Housing Finance
• Central Banks of India – IIFL Home Finance
• Indian Bank – Indiabulls Housing Finance
• Indian Bank – IIFL Home Finance
• Punjab National Bank – IIFL Home Finance
• Punjab & Sind Bank – Indiabulls Home Finance

Co-lending Deals Between Banks and SME Finance NBFCs

• Bank of Baroda – U GRO Capital
• IDBI Bank – U GRO Capital
• Bank of India – MAS Financial Services

Other Co-lending Deals

• SBI – Paisalo Digital
• Yes Bank – WheelsEMI
• SBI – Vedika Credit Credit Capital Ltd. 
• Indian Bank- Indiabulls Commercial Credit
• SBI- Save Microfinance
• Karur Vysya Bank – Chola Financial Services
• IndusInd Bank – Indel Money
• Prest Loans – U GRO Capital
• MAS Financial Services – CredAvenue
• Zip Loan – U GRO Capital

There is a rising credit demand in priority sectors that needs to be addressed.

The formalized framework of CLM supports and enables banks and NBFCs to cooperate and enjoy many benefits that were not available to them previously like greater penetration and swift access to funds.

By introducing CLM, RBI has already taken a positive step towards complete financial inclusion. It is now up to the lenders on how they can make this a successful initiative.

To make the most of their CLM partnerships, lenders must implement the right policies and use digital lending tools for agile operations.

To understand how  LeadSquared Lending CRM  can help supercharge your co-lending process.

There are multiple ways by which NBFCs can raise funds. Here are a few: – Loans from banks – usually long term but low-interest loans – Raise funds via Non-convertible Debentures (NCDs) – Via Foreign Direct Investment (FDI) – By issuing commercial paper for short term loans – By co-lending with banks – Through Bonds – By securitization of assets

Sectors in the market that do not receive adequate and timely credit are classified as Priority Sectors by the RBI. Any lending activity to these sectors falls under Priority Sector Lending. Since these are heavily underserved/underbanked, RBI has mandated Indian Banks to direct 40% of all lending activities into them. A few examples of such sectors are Agriculture, Education, Renewable Energy, MSMEs, Housing, etc.

Mayank is a Product Marketer at LeadSquared. He is always on the lookout for the latest financial trends that influence the global lending market. You can connect with him on LinkedIn or write to him at [email protected].

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What is Co Lending: the Ultimate Guide

Table of Contents

What is Co Lending?

Co lending is an arrangement where multiple lenders partner to provide loans to borrowers. This helps increase lending capacity and reduces risk for individual lenders . Each lender sets their own terms and conditions. Co lending is used in various industries like real estate, small business loans, and personal loans.

Key Players in Co Lending

Banks and Non-Banking Financial Companies (NBFCs) form partnerships to provide loans, with banks offering a part of the loan amount and NBFCs contributing the rest. This collaboration allows both parties to share the risk and profit generated from the loan, resulting in a smoother and more streamlined customer experience.

Co lending benefits banks by helping them reach untapped markets and customers , while NBFCs gain access to lower-cost funds, enhancing the overall customer experience – thanks to improved personal touch and better interface.

One notable co lending partnership is between SBFC (Small Business Finance) and ICICI Bank. This partnership allows the two entities to join forces and provide funding to borrowers who may not have been able to secure loans otherwise.

Co Lending Models

Co lending regulations.

Co lending, as a rapidly emerging trend in finance, needs to be regulated by the Reserve Bank of India (RBI) and the Ministry of Finance. To serve this purpose, regulators have issued regulations and guidelines to ensure the safety of borrowers and lenders alike. One such regulation issued by the RBI in November 2020 requires banks to maintain a minimum 20% share of the individual loans co-originated by them with NBFCs to avoid direct exposure to potential concentration risk.

This move was made to mitigate the potential concentration risk that may arise due to the involvement of a large number of NBFCs in co lending arrangements. Additionally, the RBI has mandated that banks must ensure that the NBFC partner complies with all relevant norms and regulations to further minimize direct exposure to risks.

These regulations aim to create a single point of interface between banks and NBFCs, promoting transparency and reducing risks for both parties involved.

Terms & Conditions of Co Lending Arrangement

Co-lending arrangements operate under mutually agreed terms and conditions, including the sharing of credit risk and interest income. The Reserve Bank of India and the Ministry of Finance have issued guidelines to regulate these arrangements, ensuring compliance with regulatory requirements and establishing a framework for seamless collaboration.

The agreement outlines the roles, responsibilities, and liabilities of both the bank and the NBFC , creating a clear understanding of their respective contributions. This tripartite agreement is crucial in facilitating co-lending, allowing banks and NBFCs to jointly contribute credit and provide financial services to underserved customers at an affordable cost.

Co Lending Infrastructure

Co lending in India is supported by a robust infrastructure, including the use of escrow accounts to ensure secure and efficient transactions.

When selecting a co lending partner, it’s crucial to consider factors like reputation, financial stability, and expertise in the target segment. Evaluate their technological capabilities and track record in co lending, as well as their understanding of regulatory requirements, including the use of escrow accounts.

A strong partnership built on trust and effective communication is essential for long-term success.

Learn More about Digital Lending

Advantages and Disadvantages of Co Lending

Co lending in the financial services sector offers numerous advantages to banks, NBFCs, and consumers.

• Co lending presents an opportunity for banks to increase their share of credit to priority sectors.
• By partnering with NBFCs, banks can tap into their expertise and reach in specific market segments.
• Allows banks to benefit from product innovations and lower interest rates, ultimately expanding their loan portfolio.
• Helps banks meet regulatory requirements like priority sector lending norms.
• Enables banks enhance their presence in underserved areas, bridging the credit gap and providing financial services to potential customers.
• NBFCs can leverage their expertise in niche sectors and reach underserved customers
• Partnering with banks grants NBFCs access to lower-cost funds and a wider customer base.
• This enables NBFCs to offer competitive interest rates and customized loan products, enhancing credit flow to priority sectors and supporting financial inclusion initiatives.
• NBFCs can benefit from the technological interventions and digital penetration of their partner banks.
• Co lending arrangements allow NBFCs to maximize their potential customer reach and contribute to filling the credit gap in the market.

To Consumers

• Consumers benefit greatly from this arrangement, particularly underserved customers who may have limited access to credit.
• Access to a wide range of loan products and enjoy competitive interest rates.
• The process is faster, as it reduces the turnaround time for loan approvals and disbursements.
• It also plays a crucial role in ensuring the availability of credit in underserved sectors and rural areas.
• Creates opportunities for small businesses and individuals to access affordable finance.

Applications of Co Lending

Co lending offers a wide range of application and opportunities across various sectors, including retail, MSMEs, agriculture, and housing finance. It can be utilized for financing business loans, working capital requirements, and capital expenditure.

This arrangement not only provides opportunities for product diversification and expansion into new markets but also enable lenders to share the credit risk and leverage each other’s strengths.

The Future of Co Lending

As it gains traction in the financial services industry, the future looks promising. The joint contribution of credit by multiple lenders offers benefits like diversification, reduced risk, and access to larger loan amounts.

This growing trend is set to disrupt the traditional lending industry, attracting more lenders and borrowers. With housing finance companies and other financial institutions embracing co lending, there is potential to bridge the credit gap and offer affordable cost loans to underserved customers.

The entire process, from application to recovery of interest, is streamlined, saving a lot of time for both lenders and borrowers.

Frequently Asked Questions

What is the meaning of onward lending.

Onward lending refers to the practice of borrowing funds from one lender and then lending them to another borrower. It is a common strategy, where multiple lenders collaborate to finance a single loan. This approach helps spread the risk across different borrowers but also comes with its own set of risks and regulatory requirements.

How does a co-lending model work?

A co-lending model works by bringing together multiple lenders to fund a single loan. Each lender contributes based on their risk appetite and return expectations, with the borrower receiving funds in proportion to each lender's contribution. The lead lender manages loan servicing and distributes returns to other lenders.

What is the typical ticket-size and rate of interest in co-lending?

The ticket-size varies across platforms and lenders, ranging from a few thousand dollars to several million dollars. Similarly, the interest rates also vary depending on the platform and lender, but they are generally competitive and affordable compared to traditional lending options. The rates are determined based on various factors such as the borrower's creditworthiness, loan tenure, and market conditions.

Is co-lending only limited to housing finance?

No, it is not limited to housing finance. While it is true that it has gained popularity in the housing finance sector, it can also be extended to other segments such as personal but generally, co-lending offers competitive rates compared to traditional lenders.

How to Choose the Right Co-Lending Partner?

When choosing a partner, it's important to find someone who shares your business goals and values. Consider their expertise and experience in your industry, evaluate their financial stability and track record of successful partnerships, and ensure clear communication channels for a strong working relationship.

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• Business Loan

What Is Co-Lending And How Does It Work?

Published: Apr 17, 2022, 11:11am

Lending refers to the act of extending money from one party to another for a specific period of time, in return for the future promise of the lendee returning back the money to the lender along with interest (generally specified at the time of the origination of the arrangement). 

“Co” is a short form for collaboration or in other words, the coming together of two or more parties for a specific purpose or project. Generally, it is used in its short form “Co” and as a prefix to the actual project title to show the partnership between the parties. 

Hence from the above two definitions, we can infer that co-lending refers to the coming together of two or more lenders to loan out money together to their target audience. 

Co-lending has been around for a while in India (2012-2014), however, it has recently started making known its potential in the Indian scenario with the rise of fintechs and new-age non-banking financial companies (NBFCs). Lending has become the business of the elite and every big business out there wants a piece of the pie. However, giving out loans needs two essentials:

• Funds – which is not a cheap endeavor for smaller and newer players as they have to raise the funds themselves from a larger entity which in-turn comes with their own interest liability. 
• Ready consumers – one of the most important steps of extending credit is to find credit-worthy customers as the risk of your loan turning into a bad debt has to be minimized. 

Newer players (fintech and NBFCs) usually have a wider target audience for loans because of their customer-centric approach and the rise of social-media and digital acquisition of potential customers, however they lack cheap access to large funds to extend loans to their customers. 

Established players (banks) on the other hand have a large quantum of funds ready to be deployed to the right set of customers, however their customer acquisition strategy is not keeping updated with digital penetration and they mostly stick to their offline acquisition strategies.  

Co-lending helps both these types of entities come together under one lender-umbrella and take advantage of their respective synergies to deliver a holistic experience to the benefit of all stakeholders in the arrangement. 

Terms of a Co-Lending Arrangement

A co-lending arrangement usually involves the coming together of two entities – an NBFC and a bank to take advantage of their respective capabilities. According to the Reserve Bank of India- (RBI) mandated guidelines for co-lending the following are some of the typical terms of the agreement between the parties-:

• 80-20 split: Loans are distributed in a 80:20 capital deployment ratio between the bank and the NBFC respectively. This allows the majority of the capital to be from banks which have access to a cheaper source (demand deposits) and also allow for NBFCs to be the consumer facing entity taking care of the sourcing and the corresponding experience for the customers. 
• Joint underwriting: As both the entities have a skin in the game, the underwriting is also done jointly which allows for double checks. 
• Risk-return split: The above-mentioned 80:20 split for capital deployment also trickles down to the amount of risk and return that is split between the two entities. 
• Final interest rate charged: Banks usually have a lower cost of capital and NBFC usually have a higher cost. Hence the final interest rate passed on to the customers is generally a combination weighted average cost of capital plus their respective commissions, which usually lies between the interest rate charged individually by the bank and NBFC. 
• Defined roles: The roles and responsibilities of both the entities are clearly defined in a co-lending agreement. Generally the NBFC is responsible for sourcing, customer experience and management, product innovations, quick documentations and fast turnaround time, whereas the banks are responsible for bringing in cheap funds and establishing credibility. 

Advantages of Co-Lending 

To banks: .

• Greater reach: NBFCs usually have a greater reach to the remotest areas of the country, underserved target groups and digital penetration. Hence banks can benefit from a wider pool of businesses and customers to lend to. 
• Better customer experience: NBFCs and Fintechs have customer centricity as their main goal and thus the entire customer management process of the banks gets handled by the modern partner in the arrangement with its smooth and convenient processes, which helps in conversions and repeat lending opportunities in the future. 
• Skin-in-the-game: Since the NBFCs also need to mandatorily put in at least 20% of the capital, this puts a lot of banks at ease about the quality of customers being forwarded to it and thus underwriting efforts are greatly reduced for the bank. 
• Risk management: Due to the risk division between the two partners, banks can benefit from an added sense of security and minimisation of losses in-case things go south. 
• Less interest rates: Banks have the enviable position of having access to the cheapest source of funds in the economy. Hence NBFCs can take advantage of a co-lending arrangement to extend loans at lesser interest rates as compared to their competitors. 
• Credibility: New-age companies looking to enter the lending business can build credibility for their brand in the eyes of the customers, through co-lending partnerships with big banks. 
• Risk management: Due to the risk division between the two partners, and with banks employing the majority of the capital, NBFCs can reduce the losses on their loans in case of any bad debts. 

To Consumers: 

• Better consumer experience: New-age partners like fintechs make sure that the customer has the smoothest experience during the entire process, so as to retain them for a long time and cross-sell financial products in the future. 
• Lower interest rates: Consumers do not need to pay extremely high interest rates just to go through a convenient lending process, as they get considerably lower interest rates due to banks being on board. 
• Underserved customers: Traditionally credit-deprived communities in rural areas and people with less credit history find a good fit in co-lenders as they finally get access to lending products, albeit indirectly, from banks. 
• Knowledge dissemination: NBFCs and fintechs offer the personal touch and go the extra-mile to not only source but also educate the final customer about the terms and conditions of the lending contract, thus contributing to financial literacy of underserved customers as well. 

How to Choose the Right Co-Lending Partner?

As with any other business partnership, co-lending arrangements should also be entered into with the utmost caution, as apart from the obvious financial risk involved, your entire brand image could take a make or break because of the actions of the other party. 

Some things that potential partners should keep in mind are-:

Some lenders are sector agnostic but a lot of them also have a specific focus towards a particular sector in the economy, or a particular target group like working professionals, etc. Hence the similarity of focus areas becomes important while entering into an arrangement. 

• Risk appetite 

The risk-taking capacity and willingness of the potential partner becomes extremely important to match with yours as future disputes regarding restructuring and bad debts could get ugly if things do not go as planned. 

• Ticket size

The average loan amount, with the broad spectrum, is something that has to be agreed upon while entering into a co-lending arrangement to not have disparities in the future. 

• Process nuances

Some lenders have a particular way of going about their processes, in terms of documentation, customer engagement, customer service, etc. Hence complete clarity on the same prior to starting the co-lending arrangement is extremely important for both parties. 

Application and Opportunities for Co-Lending

• Underserved and priority sector lending 

Co-lending has allowed for increased liquidity and credit penetration in underserved sectors in the economy like rural areas, MSMEs, among others, due to the widespread reach of NBFCs. This is helping in an increase in first-time borrowers in the country thus playing a huge part in filling the credit gap of approximately a couple of trillion rupees that exists. 

Even from a regulatory perspective, RBI has mandated all banks to lend a portion of their net bank credit (NBC) to some identified priority sectors in the economy. Co-lending arrangements allows for banks to easily fulfil sourcing requirements for such loans which in-turn benefits the economy in general.  

• Coming together of banks and NBFCs 

When we look at the Indian economy as a whole, both banks and NBFCs play an important role in oiling the wheels of the system through constant flow of funds to the right businesses and customers, who in turn augment demand and production of goods and services. Co-lending allows for two important pillars of the economy to come together and augment their respective capabilities thus making the entire process smoother and also expanding the target market itself.

This unique arrangement can have massive opportunities in the times to come with expectation of about INR 300 billion to be disbursed by FY23 itself. 

• Technological Interventions

Co-lending allows for the unique opportunity to make the age-old industry of lending into a comfortable and gamified experience for the final customer through Fintech led technological interventions. Banks have struggled to modernise their processes of underwriting, documentation and customer support services, which has led to loss of 21 st century customers who are used to financial products at the tip of their hand. 

With digital financial literacy and credit penetration being two important focus areas of the government as well, we can expect to see a slew of innovations around co-lending arrangements in India. 

Bottom Line 

Co-lending had come a long way from just being a buzz-word to being recognised by the RBI and proper guidelines being released for its implementation in the country. A slew of start-ups and banks have started collaborating with each other for lending in niche segments of the economy and we would only see tech-powered product innovation and loan books to increase in the times to come. 

However, with any type of lending, co-lending also comes with its numerous risks and with NPAs being in the limelight constantly in the economy, co-lending arrangements would also be tested on their robustness and fundamentals going forward. 

Ishpreet Gandhi is the founder and managing partner at Stride Ventures. Prior to founding Stride Ventures, Ishpreet Gandhi has worked with Standard Chartered Bank, Citibank, Kotak Mahindra Bank and YES Bank.

Armaan is the India Lead Editor for Forbes Advisor. He has more than a decade’s experience working with media and publishing companies to help them build expert-led content and establish editorial teams. At Forbes Advisor, he is determined to help readers declutter complex financial jargons and do his bit for India's financial literacy.

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Co-lending 101:

Decoding the complicated maze of co-lending partnerships.

R ead the e-book to know:

• What is co-lending and why is everyone talking about it?
• Different models of co-lending partnerships 
• The role of FinTechs in consummating this partnership
• The role of risk and collection intelligence in co-lending partnerships

Executive Summary

Co-lending is the coming together of banks and NBFCs to disburse loans. The idea behind such a structure is to leverage their comparative advantages for strengthening financial inclusion. Although the model holds immense potential to transform priority sector lending in India, aligning divergent systems of banks and NBFCs for joint disbursal of loans can be an operational nightmare. This e-book serves as a comprehensive guide for understanding the co-lending model, its benefits, and limitations. It also shines a light on how technology players can help with strategic alignment, process improvement, and system implementation.

“Much like marriage, co-lending is a daily challenge. Banks and NBFCs operate on different systems, divergent underwriting processes, and distinct parameters. For the partnership to stand a chance, banks and NBFCs must be prepared for constant reconciliation of their distinct personalities, traits, and dispositions.” 

Rajat Deshpande, Co-Founder and CEO, FinBox

Authors' Bio

Anna Catherine Content Specialist, FinBox

Anna is a content specialist at FinBox who tells FinTech stories that drive insights using data, narrative, and visuals. Prior to FinBox, she was with a communication agency where she worked on a range of branding activities such as positioning, conceptualization, and writing for some leading brands - Mercedes-Benz Research and Development India, Lenovo, Shell, and Toyota KiNTO, to name a few.

She holds an honours degree in Economics and a post-graduate degree in International Relations.

Rajat  Deshpande, Co-Founder and CEO, FinBox

Rajat is a Fintech specialist and a startup enthusiast who started FinBox along with his Co-Founders with a mission to lay out digital infrastructure for alternate finance solutions. Under his leadership, FinBox has built multiple products in the Embedded Finance and Big Data credit analytics spaces. FinBox has enabled over 16 million lending decisions in India and SE Asia. In his prior stints, Rajat was associated with the global consulting firm ZS, Citigroup and GoPigeon Logistics as Head of product.

He holds a Dual (BTech+MTech) degree in Mechanical Engineering from IIT, Bombay.

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Co-Lending 101: How to Kickstart Your Co-lending Journey

Table of Contents

Adding to our series of webinars on Digital Lending Guidelines (DLG), we did our first ‘Co-lending 101’ . And yes, we wrapped up an insightful session!

From the fundamentals of the co-lending model (CLM) for building more clarity around it to what it holds for the future, the expert panel had a holistic discussion.

On the panel were Aditi Olemann from Cashfree Payments , Apurva Jain from Yubi , Pankaj Chaudhary from Niyogin , Kshitij Puri from ZipLoan , and Amit Maurya from Ring .

The webinar pivoted around the meaning of co-lending, its various dimensions and challenges. It also revolved around the impact of the RBI’s DLG (Digital Lending Guidelines) .

This blog is a synopsis of the same. It is a quick read for all businesses that are either venturing or have been operating in the co-lending space. Also, if you have a solution platform that supports a co-lending ecosystem in any way then this is a must-read!

So, without any delay, let’s get into the details.

What is Co-Lending?

Before we get into the specifics of the webinar discussion, let’s understand what co-lending is.

Co-lending is defined as a form of lending where two regulated entities provide lending services to customers. It is typically a bank and an NBFC but also two NBFCs that partner together. The two entities share the liability in different ratios as pre-agreed by them .

While co-lending as a form of lending has existed for several years, the advent of fintechs in the lending space has bolstered digital co-lending into a whole new league.

Key Takeaways: Co-Lending 101

The RBI guidelines outline the priority sector co-lending between banks and NBFCs . However, NBFC-NBFC co-lending is also quite prevalent in similar lines for non-PSL (non-priority sector lending) .

Generally, First Loss Default Guarantee (FLDG) -based digital lending has been prevalent among non-regulated fintechs who partner with NBFCs to provide loans to their customers.

In this form of partnership, the Regulated Entity (RE) brings in the capital. While the non-regulated fintech brings in the customer, the risk is shared through an FLDG. However, with RBI streamlining digital lending over the last year, there is a growing trend of fintechs acquiring NBFC licenses, to enter the space of regulated co-lending.

Role of Lenders and Originators in Co-Lending

Pankaj Chaudhary opined that the role of the originator in co-lending is to acquire and service the customer. Simultaneously, the originator also ensures repayment at the agreed ROI. On the other hand, the lender is the one who puts in the larger portion of the money in the partnership. ‘What about risk sharing in such a partnership?’ Pankaj answers,

Risk participation should not lie fully with one partner but there should be a balance. Both partners must agree upon the risk-reward balance.

In addition, a tech-savvy efficient process that fuels business and growth is of paramount importance.

Also, how to choose the right partner or rather the right RE (regulated entity)? LPs (lending partners) should evaluate a product in isolation regardless of who is the originator . They should look at the product’s scalability and not whether the originator is a large entity or a small/thinly-capitalized entity.

Amit Maurya added that in non-discretionary and non-PSL sectors, one needs to have some sort of structure for FLDG. Whereas, for discretionary PSL, there can be no FLDG because the RBI does not allow any credit enhancement.

In non-discretionary co-lending, the dominant lending partner wants some comfort. This is because the originator or the sourcing partner primarily takes most decisions.

80-20 ratio is commonly seen between regulated entities getting into co-lending, but other ratios also exist. However, less than 10% is not recommended .

Challenges in Co-Lending

What lending partners have been looking out to solve is how they go about the whole lending business. They aim for being more efficient. They seek the capability of providing a more organised way of lending, from initiating to processing to managing.

Secondly, data sharing and data structuring safely and easily is something that they need to take care of. Moreover, it is an ongoing and real-time process.

Lastly but most importantly, they must store all this data exchange in a compliant way.

Apurva Jain highlighted the challenges that REs face when it comes to integrations for data exchange and the overall operational complexities . One-on-one integration is time-consuming and repetitive and if that fails, the whole process can fall.

Lending, an already complex process, doubles its complications with co-lending. The reason is that the two entities come with their own sets of criteria and policies with which they underwrite a borrower. Both parties need to configure their credit policies and credit filters when loan value passes on from the originator to the lender. For reporting and reckoning processes as well, they need to create parallel workflows according to the agreed terms.

This makes it very complex for two entities to work together and go live on co-lending. The critical role of lending platforms and payment service providers here is to help simplify operations. Also, they should make integration and go-live simpler for two REs getting into a co-lending partnership.

Co-lending Models

There are two co-lending models – CLM1 (Co-lending Model 1) and CLM2. In CLM1, both parties pool in money and disburse the loan. In CLM2, one party disburses and the other party reimburses. CLM1 is the preferred mode for most NBFCs getting into co-lending.

Also, CLM 1 can be for both PSL and non-PSL, however, CLM2 is only for PSL.

Co-lending is not a new concept and the RBI has been promoting it for a long time since credit penetration has been confined to limited regions and segments. However, after the fintechs came into play, the RBI encourages credit disbursement but also wants lenders to follow a framework.

It wants that the originator/sourcing partner should know its customers and NOT LEND just on behalf of the lender, Likewise, the lender must not pass 100% risk to the originator .

Also Read: Unlocking New Opportunities for Growth with Digital Lending

Payment Flow

The payment flow into the account of the borrower by the lenders is important to focus on. This depends on the type of lending arrangement that exists between two partners. For instance-

• If it is a  100-0 arrangement , then the handling of the money is the sole responsibility of the lender contributing 100% of the loan. This means that the lending and repayment must happen directly between the bank accounts of the lender and borrower. The originator must not touch that money
• When it’s a co-lending arrangement between two parties, a co-lend-escrow account is strongly recommended. The REs open an account in a bank, in compliance with the CC/OD guidelines, and they pool their money in the common account. A separate collection co-lend escrow is also created for repayments coming in for this partnership. Payment aggregators have an important role to play in the payment flows, both in disbursals (as a Technical Service Provider), and in repayments, in the capacity of a Payment Aggregator

Parting Thoughts

So, that was the summary of the enlightening session we had at the Webinar – Co-lending 101: The Road Ahead – How to Kickstart your Co-lending Journey .

Starting with the basics of what is co-lending and the RBI’s co-lending guidelines , we delved deeper into it. We have covered other aspects of co-lending in our previous sessions and look forward to doing it in future.

So, stay tuned and meanwhile, you can check out the full-stack digital lending solution for NBFCs and Fintechs by Cashfree Payments .

Key Terminologies

Frequently used acronyms, their full forms and meanings for your reference:

RBI: Reserve Bank of India

The RBI is the country’s central bank as well as a regulatory body that regulates and guides the Indian banking system. It lays down the norms according to which all banks or non-banking financial companies (NBFCs) must function.

NBFC: Non-Banking Financial Company

NBFCs are the institutions that provide financial services, similar to banks but do not have full banking licenses. Unlike banks, they can’t accept deposits and raise money through bonds or borrowing from banks. They also have fewer regulatory controls than banks. However, the RBI regulates both banks and NBFCs. They are also known as NBFIs (Non-Banking Financial Institutions) .

RE: Regulated Entity

By REs or Regulated entities, we refer to banks or NBFCs that the RBI regulates.

FLDG: First Loan Default Guarantee

This is about the co-lending model between a fintech and an RE (banks/NBFCs). It is an arrangement where the RE is the lender and the fintech being the originator takes a guarantee of compensation to the RE up to a certain limit in case the borrower defaults. The RBI’s first set of digital lending guidelines states that the loan transaction must occur directly between the borrower and the RE’s account. It should be through any unregulated entity or third-party loan service provider such as fintech. So, with the FLDG model in crisis, fintechs look forward to acquiring an NBFC license.

LSP: Lending Service Providers

Lending Service Providers can be fintechs or any such third-party digital platforms that provide loans, credit lines and lending services to borrowers. As they are not banks/NBFCs themselves, they may lend to borrowers in connection with the REs. However, they help through their digital services in reaching out larger customer base and acquisition as well as faster and easy processing like underwriting and repayment of loans.

DLG : Digital Lending Guidleines

The RBI came up with Digital Lending guidelines that apply to all REs for lending purposes. Be it banks (commercial or primary/urban/state/district central co-operative) or NBFCs including HFCs (Housing Finance Companies) must comply with the DLG

PSL: Priority Sector Lending

Priority sectors are those sectors that the GOI and the RBI consider important for the development of the nation and give priority over other sectors. They implore the banks to dedicate funds to these sectors such as agriculture, education, housing, etc. for poor strata of the country. The rest of the sectors are termed as non-PSL.

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The relevance of co-lending and the role of tech platform in scaling the model

• Original Research
• Published: 10 December 2021
• Volume 9 , pages 225–232, ( 2021 )

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• K. Karthik CA   ORCID: orcid.org/0000-0002-8909-3121 1 &
• Sai Vinod Kumar Pandiri   nAff1  

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In this article we will be focus on what co-lending is and why this is emerging as an important asset class. Co-Lending in simple terms is a joint lending process involving two financial institutions. We will also be delving on to what the advantages are for each of the stakeholders: Banks, NBFCs and borrowers. Further we will dive deep down into the current issues faced by this model both from an operational and technological aspect and the role played by Fintech companies/third party integrations in solving some of these issues aiding in scale up of this vertical.

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RBI Docs: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT49BAA4688D36A64EAF8DB0BFD99C6FC54C.PDF

Mamtha Asokan, IDBI Bank, U GRO Capital ink co-lending agreement to give small business loans https://timesofindia.indiatimes.com/business/india-business/idbi-bank-u-gro-capital-ink-co-lending-agreement-to-give-small-business-loans/articleshow/86687067.cms

Central Bank of India enters co-lending partnership with lIFL Home Finance https://www.livemint.com/industry/banking/central-bank-of-india-enters-co-lending-partnership-with-lifl-home-finance-11633441767017.html

SBI partners three NBFC-MFIs for co-lending to joint liability groups, https://www.livemint.com/industry/banking/sbi-partners-three-nbfc-mfis-for-co-lending-to-joint-liability-groups-11632925502960.html

Indel Money ties up with IndusInd Bank for gold loan co-lending partnership, https://www.thehindubusinessline.com/money-and-banking/indel-money-ties-up-with-indusind-bank-for-gold-loan-co-lending-partnership/article36751816.ece

Bank of India inks pact with MAS Financial Services for co-lending to MSMEs, https://knnindia.co.in/news/newsdetails/msme/bank-of-india-inks-pact-with-mas-financial-services-for-co-lending-to-msmes

MAS Financial rises after parterning CredAvenue for co-lending platform, https://www.business-standard.com/article/news-cm/mas-financial-rises-after-parterning-credavenue-for-co-lending-platform-121091300486_1.html

IIFL Home Finance Signs Pact With PNB For Co-Lending, https://www.outlookindia.com/website/story/business-news-iifl-enters-fourth-co-lending-agreement-this-time-with-pnb/394900

KR Srivats, Co-lending: Punjab and Sind Bank ties up with Indiabulls, https://www.thehindubusinessline.com/money-and-banking/co-lending-punjab-sind-bank-ties-up-with-indiabulls/article36447086.ece

Dinesh Unnikrishnan, Yes Bank, Indiabulls ink pact for co-lending:10 Key questions answered, https://www.moneycontrol.com/news/business/yes-bank-indiabulls-ink-pact-for-co-lending10-key-questions-answered-7243591.html

Ram Kumar K, HDFC-Indiabulls Housing co-lending partnership: Is it a prelude to something bigger?, https://www.thehindubusinessline.com/money-and-banking/hdfc-ibhfl-co-lending-partnership-is-it-a-prelude-to-something-bigger/article34382588.ece

U GRO Capital launches Pratham, a MSME co-lending program with Bank of Baroda, https://economictimes.indiatimes.com/small-biz/sme-sector/u-gro-capital-launches-pratham-a-msme-co-lending-program-with-bank-of-baroda/articleshow/84605750.cms

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Karthik, K., Pandiri, S.V.K. The relevance of co-lending and the role of tech platform in scaling the model. CSIT 9 , 225–232 (2021). https://doi.org/10.1007/s40012-021-00343-6

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RBI’s Co-Lending Model Guidelines for Banks and NBFCs

Co-lending, also known as co-origination, is a system in which banks and non-banking financial companies collaborate to provide credit to the priority sector participants. Under this arrangement, banks and NBFCs share risk in an 80:20 ratio (80 % of the loan with the bank and a minimum of 20% with the non-banks).

The Reserve Bank of India has devised a Co-Lending Model (CLM) program where banks and NBFCs work together to provide loans to priority sector borrowers on a pre-agreed basis. The RBI launched the co-origination of the loan program in September 2018, which was updated in 2020 and renamed the “Co-lending Model.” It intends to provide all lending institutions with more freedom.

According to RBI guidelines, a minimum of 20% of credit risk from direct exposure must be held by the NBFC till maturity, with the remainder owned by the bank. When the loan matures, the bank and the NBFC split the interest payback or recovery according to their credit and interest share.

Because of this dual origination, banks can claim priority sector status for their portion of the credit. Customers interact with NBFCs through a single point of contact, and a tripartite agreement is reached between customers, banks, and NBFCs.

Let’s learn more about the RBI’s Co-Lending Model Guidelines for Banks and NBFCs.

What is the Co-Lending Model?

In 2018, the Reserve Bank of India (RBI) released the co-origination framework, allowing banks and non-bank financial companies to co-originate loans. In 2020, the rules were revised and renamed co-lending models (CLM) to include Housing Finance Companies and other adjustments to the framework.

CLM’s primary goal is to increase credit flow to the unserved and underserved economy segments at a reasonable cost. Banks have cheaper funding costs, and NBFCs have a more extensive reach outside tier-2 and tier-3 cities.

Why has it taken so long for Co-Lending to gain traction?

The Ministry of Finance has pushed PSU banks to use co-lending schemes on multiple occasions. In the beginning, some PSU banks partnered with large non-banking institutions. In September 2019, for example, SBI partnered with ECL Finance, a subsidiary of Edelweiss Financial Services.

However, several of these collaborations did not pan out as planned. According to bankers, both banks and NBFCs are receptive to such collaborations, but the difficulty lies in the execution on the ground.

As both banks and NBFCs would operate on various systems, underwriting processes, and characteristics, IT integration of systems was one of the most significant obstacles.

What is the RBI’s notification on the Bank-NBFC Co-Lending Model?

RBI  RBI/2020-21/63  passed the notification on November 5th, 2020,  FIDD.CO.Plan. BC.No.8/04.09.01/2020-21 .

The primary goal of this circular is to:

• To improve credit flow to the unorganized and underserved sector of the economy
• To enable access of funds to the ultimate beneficiary at affordable rates
• To strengthen the relationship between banks and NBFCs regarding lending to the priority sector.
• Adopting government techniques to achieve a proficient harmonization of loans in key areas.
• To help banks increase their reach by using the technology of NBFCs.

Priority Sector

The RBI considers the essential priority sectors of the economy to be those where timely and sufficient credit may be challenging to obtain. The following categories are included in the Priority Sector:

• Agriculture
• Micro, Small, and Medium Enterprises (MSMEs)
• Export Credit
• Renewable Energy
• Social Infrastructure
• Miscellaneous

What are the Co-Lending Model’s Guidelines?

The following are the critical goals of the Co-Lending Model:

1. Improvement in Credit Flow

The Indian government has proposed to help the country’s rural areas. The rural sector in India accounts for the majority of the population. As a result, the goal is to establish a steady flow of excellent credit in rural society, aiding in its growth and development.

2. Maximum Reach

Through the partnership, both non-banking financial companies and banks can benefit from each other’s strengths. The decreased cost of funding from banks combined with the NBFC’s wider reach will make low-cost funds available to the eventual recipients.

3. Generating Funds

The goal is to increase the availability of funds, particularly in rural areas, because obtaining loans from the public sector and financial institutions are sometimes difficult for those living in rural areas. As a result, banks have formed partnerships with these non-banking financial companies to generate funds for rural areas.

4. Sharing Risks and Rewards

Collaboration between banks and NBFCs would result in improved lending plans and the development of cutting-edge technology. However, it would also include sharing various types of risks and returns between banks and NBFCs, easing the pressure on them in the long run.

5. To Strengthen the Bond

This collaboration would strengthen the link between banks and NBFCs, that’s why the government has devised the co-lending model. This program allows both banks and NBFCs to achieve their objectives coordinated. The government has implemented several policies to strengthen the interaction between the NBFC and the bank.

What Characteristics Does the Co-Lending Model Have?

The Reserve Bank of India has implemented a co-lending scheme to improve and expand lending terms for both banks and non-banking financial companies. The following are the main characteristics of the co-lending model:

Banks and non-banking financial companies (NBFCs) must ensure that adequate systems are in place to implement anti-money laundering and due diligence measures.

Non-Banking Financial Companies are responsible for dealing with and negotiating with clients.

3. Master Agreement

Banks and NBFCs are mandated to enter into a master agreement. The terms and conditions of the agreement should include the arrangement’s terms and conditions, the criteria for selecting partner institutions, the specific product lines and areas of operation, segregation of responsibility provisions, and consumer interface and protection issues.

4. Warranties and Representations

All co-lending agreements must include representations and warranties that must be in accordance with the pre-negotiated terms and conditions between non-banking financial companies and banks.

5. Internal Audit

It’s critical to follow the bank’s and NBFC’s internal and external audit criteria for the types of loans they will provide under the co-lending plan.

6. Security

In the co-lending approach, the NBFC and the bank will jointly decide on the terms of security creation.

7. Business Continuity

The requirements of the co-lending agreement should have no impact on the usual business that banks and NBFCs do with their customers.

8. Approval

All information related to the co-lending model should be made available to clients and must be authorized by them. Customers can also file concerns with the Reserve Bank of India’s Customer Education and Protection Cell.

9. Loan Recovery

The co-lending plan would include the necessary provisions for recovering loans from clients.

10. Promoter Groups

Under this co-lending model, banks cannot participate in any other co-lending regime. The Non-Banking Financial Company is governed directly by a promoter group.

The Reserve Bank of India ( RBI ) has created the Co-lending model plan, which involves collaboration between banks and non-banking financial companies (NBFCs). As a result, all conditions in this agreement must be in accordance with what the parties have agreed to provide loans to priority sector borrowers based on the prior agreement. To learn more, get in touch with  NBFC Advisory .

Varun Sharma

Varun is a CA by profession and domain expert of startup Advisory and Regulatory Services like FEMA, RBI & IRDA. During his professional career, he has worked with various international companies and helped them to set up their business in India.

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Co-lending by NBFCs

• What is Co-origination/ Co-lending

Simply put, co-lending/ co-origination is the joint contribution of a loan by two or more lenders.  To that end, the Reserve Bank of India ( “ RBI ”), vide its earlier notification dated September 21, 2018 titled ‘ Co-origination of loans by Banks and NBFCs for lending to priority sector ’ provided for co-origination by scheduled commercial banks with systemically important non-deposit taking non-banking finance companies (NBFC-ND-SI). This has been revised and rechristened as ‘Co-Lending Model’  by the RBI vide its notification dated November 05, 2020 (“ Notification ”).

• Non-applicability of the Notification in case of co-lending by NBFCs

Currently the Notification does not apply to co-lending by two NBFCs, and only governs co-lending arrangements between banks and NBFCs (including housing finance companies) to the priority sector. Evidently, there are no specific guidelines which regulate co-lending by NBFCs. In the past year especially, we have witnessed NBFCs, influenced by commercial requirements, entering into co-lending arrangements not only with banks but also with other NBFCs, enabling wider access to the credit market. As per the Notification, NBFCs (originating the loan) are required to retain 20% share of the individual loan on their books. In the absence of any guidelines governing the co-lending arrangements between NBFCs (not involving banks), while one may argue that 20% retention requirement may not apply, we do note that some of the co-lending structures available in the public domain have clearly adopted the 20% retention rule even for co-lending amongst NBFCs.

• Forms of Co-Lending

Taking guidance from the Notification, co-lending can take one of two forms:

• Non-discretionary – where the co-lending arrangement contemplates prior and irrevocable commitment of the other co-lender to take its portion of the loan on its books; or
• Discretionary – where the other co-lender will have the discretion to take the loan on its books after the loan has been originated by the NBFC, based on its due diligence.

Evaluating the Notification, it would appear that for the purposes of co-lending arrangements between two designated NBFCs, non-discretionary lending would require compliance with the extant guidelines dated November 09, 2017 on ‘ Directions on Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs ’ issued by the RBI, as applicable to NBFCs. On the other hand, discretionary co-lending which is deemed akin to direct assignment would appear to require compliance with the direct assignment guidelines issued by the RBI dated September 24, 2021 titled ‘ Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 ’.

• Compliance with KYC Directions

It is pertinent to note that as per the Master Direction – Know Your Customer (KYC) Direction, 2016 (“ KYC Direction ”), a co-lending NBFC may also rely on the KYC undertaken by the originating NBFC. Under the KYC Direction, the RBI allows regulated entities to rely on customer due diligence undertaken by a third party (including originating NBFC), subject to compliance with certain conditions, including:

• the co-lender satisfying itself that relevant identification data/ documents shall be made available by the third party (i.e. originating NBFC) upon request without delay; and
• that the third party is regulated, supervised or monitored, and has measures in place to comply with customer due diligence and record keeping as per the Prevention of Money Laundering Act, 2002.

Any bank/NBFC participating in co-lending must recognise that the ultimate responsibility for customer due diligence and enhanced due diligence measures shall remain with each respective co-lender and cannot be outsourced.

While the Notification only addresses co-lending between banks and NBFCs for priority sector, there does not appear to be any bar on co-lending arrangements that otherwise meet the applicable structured lending norms. In practice, several NBFCs enter into co-lending structures. In such cases, entities may adopt prudent regulatory and compliance practices to ensure that the outsourcing and customer due diligence provisions, which emulate the core values of customer protection and responsibilities of regulated entities (i.e. each co-lending NBFC), are followed.

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Home / Knowledge Hub / Blog / RBI’s Guidelines on Co-Lending: 2022

RBI’s Guidelines on Co-Lending: 2022

Co-lending is a collaborative financing model for co-underwriting and co-disbursement between NBFCs and banks to the underserved priority sector. The Co-Lending Model (CLM) is an upgraded version of the co-origination of loan schemes by RBI. This article details the RBI guidelines for effective functioning of the Co-Lending Model and regulations for originators and lenders.

In this article test

The concept of co-lending has been around for quite a long time now. But in 2018, after the RBI (Reserve Bank of India) laid out the framework for the co-origination of loans , more banking and non-banking institutions came together to  make funds available to the priority sector, which was later renamed the Co lending model (CLM). Co-lending refers to a set-up where the banking and non-banking sectors collaborate for the combined grant of credit for priority sector lending. According to this arrangement, two lending firms, such as banking and non-banking institutions. , come together and share risk in a ratio of 80:20 (80 per cent loan with bank and a minimum of 20 per cent with non-banks).

The Co-Lending Model (CLM)

For lending to the priority sector, the Reserve Bank of India (RBI) in September 2018, the Co-origination of Loans by Banks and Non-Banking Financial Company (NBFC). The Reserve Bank of India had also further stated that this arrangement called for the combined credit contribution by both the lenders and sharing risks and rewards as well. After receiving feedback from different stakeholders, RBI permitted the lenders additional operational flexibility while instructing them to conform to regulatory guidelines. 

As per the RBI guidelines on co-lending issued on November 5, 2020, the co-origination of the loan scheme was renamed CLM (Co-Lending Model). This model has the primary aim to enhance the credit flow & make funds available at a reasonable cost, taking into account the lower cost of funds from banks and the massive reach of the NBFCs. 

The Co-lending model has the following benefits for the ultimate/end-borrower :

• Improvement in quality and turnaround time
• Quick Loan Disbursal 
• Lower Interest Rates 
• Large Customer base

What are the RBI Guidelines on Co-lending ?

The latest  guidelines on co-lending issued by RBI on November 5, 2020, state the following: 

• With reference to the earlier co-lending RBI circular dated September 21, 2018, on loan co-origination by banking and non-banking institutions for lending to the priority sector, the set-up calls for a combined contribution of credit by both the lenders and sharing of risks and rewards.
• Upon acquiring the feedback from the stakeholders to better leverage the individual comparative benefits of the banking and non-banking institutions in a collective effort, RBI has decided to provide greater operational flexibility to these lending institutions. RBI further demands that these lending institutions conform to the regulatory guidelines on outsourcing, KYC, etc. 
• Based on prior agreement, banks are allowed to co-lend with all registered NBFCs, including HFCs. While the co-lending banks will take their share of the individual loans back-to-back in their books, the NBFCs must maintain at least a 20 % share on their books.
• As per CLM 2 guidelines, which was introduced by RBI in 2020, for entering into the CLM, the banking and non-banking institutions shall formulate and place the Board-approved policies on their websites. Based on their Board approved guidelines, a Master Agreement may be entered into between the two partner institutions. 
• According to the Master Agreement, it may allow the banks to mandatorily take their share of the individual loans originated by the NBFCs in their books as per the terms of the agreement or retain the discretion to reject certain loans.
• Further, RBI authorises the banks to claim priority sector status about their share of credit while engaging in the Co-lending Model (CLM) and sticking to the prescribed conditions.

What are the Risks Involved in Co-lending?

Although the Co-Lending Model (CLM) has several advantages, it faces criticism  for its move by the big banks to tie up with small NBFCs.  

• Under the CLM, since 80 per cent of the risk lies with the banks, the banks suffer losses if there is a default. However, in such circumstances, NBFCs also face losses. Since NBFC is small enough (compared to banks), there are higher chances of them getting wiped out. So such a scenario is more of a threat to NBFC as much as to the banks.
• According to the terms of the master agreement, it authorises the banks to either accept their claim of the individual loans originated by the NBFCs or reject certain loans which are not as per the policy. However, certain unforeseeable factors or minor errors may lead the bank to reject the loan, thus making it a burden to NBFCs books.
• The RBI guidelines on co-lending authorise the NBFCs as the single point of interface for customers and also enter into loan agreements with the borrowers. Further, there is a lack of clarity on behalf of RBI on co-lending about the CLM structure and the functions & duties of the NBFCs and banks. 
• NBFCs are concerned banks might rope in or steal their customers
• Data integration and data security is another risk factor
• Since credit policy is the most critical intellectual property right in the lending space, hence sharing that is risky.

Why is a Co-lending platform for you? 

Co-lending platforms connect banking and non-banking institutions to disburse joint loans to the borrowers. YubiCo.lend is one such fully integrated platform, providing opportunities for easy discovery and 

seamless loan processing between the NBFCs and banks. It takes care of the compliances and splitting requirements to power the co-lending ecosystem, such as enablement of:

• Time integration
• Fast discovery 
• Real-time and transparent journey
• Connectors & plug-ins provide a complete co-lending ecosystem
• Collection and portfolio monitoring
• Payouts/FLDG/charges are automatically computed by technology, thereby reducing human intervention.

This platform helps NBFCs to get discovered by banks to meet their loan origination requirements. Cred Co-Lend has a partnership with 500+ lenders, and thus you can associate with the bank at a price that suits you. Further, using this platform, banks can identify the NBFCs meeting your criteria with a transparent credit rating module and 240+ potential co-lending partners across multiple sectors.   

Q: Is the CLM and Co-origination of Loan Scheme announced by the RBI in September 2018 the same?

A: There is a lack of clarity on behalf of RBI on co-lending about the CLM structure and the functions & duties of the NBFCs and banks. The Co-lending model (CLM) is basically an advancement over the Co-origination of Loan Scheme announced by the RBI in September 2018. 

Q: What is the co-lending RBI guideline issued for priority sector norm?

A:  Under the priority sector norms, the co-lending RBI guidelines state that banks must loan a specific portion of their funds to specified sectors – like the weaker section of society, agriculture, MSME, and social infrastructure.

  Q: What happens if the agreement is terminated between the co-lenders?

  A: The banks and the NBFCs both shall implement a business continuity plan to ensure uninterrupted service to their borrowers till repayment of the loans under the co-lending agreement in the circumstance of termination of co-lending arrangement between the co-lenders.

Q: What is the co-lending RBI guideline issued regarding Customer Grievance Redressal?

A: As per the co-lending RBI circular issued about Customer Grievance Redressal, the co-lenders must make a suitable arrangement to resolve any complaint lodged by a borrower with the NBFC within 30 days. If the query is not resolved, the borrower can escalate the same complaint with the concerned Banking Ombudsman or Ombudsman for NBFCs or the Customer Education and Protection Cell (CEPC) in RBI.

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HELB Provides Code for Repayment of Loans for Borrowers without Smartphones, Procedure

• Higher Education Loans Board (HELB) revealed that 298,511 accounts holding KSh 32.81 billion were in default
• The board funded 606,329 students at a total cost of KSh 33.45 billion in the financial year 2023/24, bringing the total number of beneficiaries to 1,696,781 since inception
• In a post on its official X handle on Tuesday, the state corporation said borrowers using Kabambe phones could dial *642# to repay their loans

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TUKO.co.ke journalist Japhet Ruto has over eight years of experience in financial, business , and technology reporting and offers profound insights into Kenyan and global economic trends.

The Higher Education Loans Board (HELB) has provided a code for borrowers without smartphones to repay their loans.

What is HELB's USSD code for loan repayments?

In a post on its official X handle on Tuesday, September 3, the state corporation said borrowers using Kabambe phones could dial *642#.

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"No smartphone? You can conveniently repay your loan by dialling USSD code *642#," it stated.

HELB listed the steps to follow after dialling the code.

What are the steps to follow in HELB loan repayment?

• Dial *642#.
• Log in or register.
• Select loan repayment.
• Select M-Pesa.
• Enter amount.
• Enter M-Pesa pin.
• You will receive SMS notifications from M-Pesa and e-Citizen upon payment.

How many Kenyans are paying HELB loans?

HELB funded 606,329 students at a total cost of KSh 33.45 billion in the financial year 2023/24, bringing the total number of beneficiaries to 1,696,781 since inception.

The state corporation revealed that 710,107 borrowers took loans totalling KSh 41.73 billion, which were not yet due for repayment.

In contrast, 986,674 loans, amounting to KSh 127.81 billion, had matured and were due for collection .

Family Bank records KSh 1.65 billion profit after tax in first half of 2024

HELB disclosed to TUKO.co.ke that only 443,501 beneficiaries were actively repaying their loans , accounting for KSh 64.01 billion, whereas 298,511 accounts holding KSh 32.81 billion were in default.

What's the waiver for HELB's lump sum payments?

Many Kenyans have defaulted on paying their loans after graduation because of a lack of employment.

HELB announced up to 80% penalty waiver to those who will make full payments.

The board stated that the decision was to lighten the load for those struggling to repay their loans due to accruing penalties.

Proofreading by Mercy Nyambura Guthua, journalist and copy editor at TUKO.co.ke

Source: TUKO.co.ke

Japhet Ruto (Current Affairs and Business Editor) Japhet Ruto is an award-winning TUKO.co.ke journalist with over eight years of working experience in the media industry. Ruto graduated from Moi University in 2015 with a Bachelor’s Degree in Communication and Journalism. He is a Business & Tech Editor. Ruto won the 2019 BAKE Awards’ Agriculture Blog of the Year. He was named TUKO.co.ke's best current affairs editor in 2020 and 2021. In 2022 and 2023, he was TUKO.co.ke's best business editor. He completed the Experimenting with new formats and Advance digital reporting curriculum from Google News Initiative. Email: [email protected].

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The Law of Co-lending

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Our write-ups on related topics may be viewed here –

• Participation in loan exposure by lenders – https://vinodkothari.com/2021/10/loan-participations-the-rising-star-of-loan-markets/
• New model of Co-lending in financial sector – https://vinodkothari.com/2020/11/new-model-of-co-lending-in-financial-sector-scope-expanded-risk-participation-contractual-borders-with-direct-assignment-drawn/
• Presentation on Co-lending Guidelines – https://vinodkothari.com/wp-content/uploads/2020/11/Presentation-on-Co-lending-guidelines-final-1.pdf
• One stop RBI norms on transfer of loan exposures – https://vinodkothari.com/2021/09/rbi-norms-on-transfer-of-loan-exposures/
• FAQs on Transfer of Loan Exposure – https://vinodkothari.com/2021/10/37064/

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