{"id":344163,"date":"2025-08-08T17:47:02","date_gmt":"2025-08-08T12:17:02","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=344163"},"modified":"2025-08-08T17:47:02","modified_gmt":"2025-08-08T12:17:02","slug":"rbi-tightens-co-lending-norms","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/rbi-tightens-co-lending-norms\/","title":{"rendered":"RBI Tightens Co-lending Norms"},"content":{"rendered":"<p><strong>News: <\/strong>The Reserve Bank of India (RBI) has issued revised guidelines to strengthen the co-lending framework between banks and non-bank financial companies (NBFCs).<\/p>\n<h2>RBI Tightens Co-lending Norms<\/h2>\n<figure id=\"attachment_344164\" aria-describedby=\"caption-attachment-344164\" style=\"width: 402px\" class=\"wp-caption aligncenter\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\" wp-image-344164\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/08\/Source-BS-1.jpg?resize=402%2C225&#038;ssl=1\" alt=\"\" width=\"402\" height=\"225\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/08\/Source-BS-1.jpg?resize=300%2C168&amp;ssl=1 300w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/08\/Source-BS-1.jpg?resize=1024%2C574&amp;ssl=1 1024w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/08\/Source-BS-1.jpg?resize=768%2C431&amp;ssl=1 768w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/08\/Source-BS-1.jpg?w=1229&amp;ssl=1 1229w\" sizes=\"auto, (max-width: 402px) 100vw, 402px\" \/><figcaption id=\"caption-attachment-344164\" class=\"wp-caption-text\">Source &#8211; BS<\/figcaption><\/figure>\n<ul>\n<li><strong>Co-lending: <\/strong>It is a brilliant example of <strong>financial teamwork<\/strong> where two financial institutions, like a big bank and an NBFC, team up to <strong>give out loans together<\/strong>.\n<ul>\n<li>It refers to the <strong>collaborative loan service<\/strong> where two lending institutions jointly fund loans to borrowers.<\/li>\n<li>This partnership <strong>allows both entities to distribute their resources<\/strong> more efficiently, providing customers with the combined expertise and financial muscle of both lenders.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>Revised Guidelines of RBI<\/strong><\/p>\n<ul>\n<li>The new framework will <strong>supersede the co-lending guidelines issued in 2020<\/strong>, which were <strong>limited to priority sector lending<\/strong>.<\/li>\n<li>The revised rules will <strong>come into force from 1 January 2026<\/strong>, though lenders may <strong>choose<\/strong> to implement them earlier based on their internal policy.<\/li>\n<li>Under the new <strong>Co-lending Arrangements (CLA) Directions, 2025<\/strong>, all <strong>regulated entities<\/strong>\u2014including <strong>commercial banks<\/strong> (<strong>excluding<\/strong> small finance banks, regional rural banks, and local area banks), <strong>all-India financial institutions, and NBFCs<\/strong> (including housing finance companies)\u2014must <strong>retain a minimum of 10 per cent of every loan on their books<\/strong>.<\/li>\n<li><strong>Uniform NPA Tagging To Prevent Arbitrage<\/strong>\n<ul>\n<li>To <strong>address regulatory gaps<\/strong>, the RBI has introduced <strong>borrower-level asset classification<\/strong>.<\/li>\n<li>If a loan is classified as a <strong>Special Mention Account (SMA) or Non-performing Asset (NPA)<\/strong> by <strong>one<\/strong> lending partner, the <strong>same classification must be adopted by the other<\/strong><\/li>\n<li>This information must be <strong>shared on a near real-time basis<\/strong> to avoid regulatory arbitrage.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Borrowers\u2019 Charges<\/strong>\n<ul>\n<li><strong>Borrowers will now be charged<\/strong> a <strong>blended interest<\/strong> rate, calculated as the weighted <strong>average of each partner\u2019s internal rate<\/strong> based on their share of funding.<\/li>\n<li>All other charges must be disclosed in the <strong>Key Facts Statement (KFS)<\/strong> and factored into the <strong>Annual Percentage Rate (APR).<\/strong><\/li>\n<\/ul>\n<\/li>\n<li><strong>Borrower Protection and Operational Clarity<\/strong>\n<ul>\n<li>The new rules mandate <strong>detailed loan agreements<\/strong> specifying <strong>borrower eligibility criteria, product structure, partner roles, and fee arrangements.<\/strong><\/li>\n<li>A <strong>single point of contact<\/strong> must be designated for the borrower throughout the loan lifecycle, and any change must be communicated in advance.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Dedicated Escrow Account.<\/strong>\n<ul>\n<li><strong>Disbursements and repayments<\/strong> are to be routed exclusively through a <strong>dedicated escrow account.<\/strong><\/li>\n<li>Partner lenders must <strong>reflect their loan share within 15 days of disbursal<\/strong>; <strong>failure<\/strong> to do so will result in the <strong>loan remaining on the originating lender\u2019s books<\/strong>, with transfer allowed <strong>only under RBI\u2019s Transfer of Loan Exposure guidelines.<\/strong><\/li>\n<\/ul>\n<\/li>\n<li><strong>Transparency and Timeline<\/strong>\n<ul>\n<li><strong>Lenders<\/strong> are now required to <strong>publicly disclose co-lending arrangements<\/strong> on their websites and in their financial statements.<\/li>\n<li>These disclosures must <strong>cover loan amounts, sectors served, interest rates, fees, and partner names.<\/strong><\/li>\n<li><strong>Credit policies<\/strong> must be <strong>updated accordingly<\/strong>, and institutions must devise business continuity plans to safeguard borrowers in case of partnership termination.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>News: The Reserve Bank of India (RBI) has issued revised guidelines to strengthen the co-lending framework between banks and non-bank financial companies (NBFCs). RBI Tightens Co-lending Norms Co-lending: It is a brilliant example of financial teamwork where two financial institutions, like a big bank and an NBFC, team up to give out loans together. It&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/rbi-tightens-co-lending-norms\/\">Continue reading <span class=\"screen-reader-text\">RBI Tightens Co-lending Norms<\/span><\/a><\/p>\n","protected":false},"author":10393,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127,12039],"tags":[11872],"class_list":["post-344163","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","category-knolls","tag-9pm-daily-factly","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/344163","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10393"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=344163"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/344163\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=344163"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=344163"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=344163"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}