What is co-lending?

Short answer

Co-lending is when two regulated lenders, usually a bank and an NBFC, jointly fund each loan in a pre-agreed ratio under one agreement. Each lender keeps a share of every loan on its own books. The NBFC typically brings the customer relationship and reach, and the bank brings cheaper funds. RBI regulates these arrangements through its co-lending directions.

Hindi mein samjhiye

Co-lending mein bank aur NBFC milkar ek hi loan dete hain, pehle se tay hisse ke hisaab se. NBFC customer laata hai, aur bank sasta paisa deta hai. Dono lender har loan ka apna hissa apni books mein rakhte hain.

How it works

The partners sign a master agreement: ratio, eligibility criteria, pricing, servicing and recovery roles.
The originating lender sources and underwrites. The partner either takes its share of each loan upfront or reviews it against agreed criteria.
Disbursal is funded in the agreed ratio, usually through an escrow account.
EMIs are split between the lenders in the same ratio. One party is the single point of contact for the borrower.

Co-lending vs direct assignment

In direct assignment, an NBFC originates loans on its own book and later sells a pool to a bank. In co-lending, both lenders fund each loan from day one. Co-lending carries ongoing operational load: split ledgers, escrow reconciliation, and asset classification that must stay consistent across both lenders.

What the tech has to handle

Real-time loan-level sharing with the partner, split accrual and repayment ledgers, and escrow-based disbursal and collection. It also needs matching SMA/NPA tagging on both books and borrower communication that names both lenders. A co-lending-ready LMS handles this, instead of spreadsheets.

Common questions