What a co-lending arrangement is
A co-lending arrangement (CLA) is a formal pairing between two regulated entities — classically a bank and an NBFC — that originate loans together: the NBFC brings sourcing reach and on-ground underwriting, the bank brings balance sheet and a lower cost of funds, and both hold a share of every loan on their own books. The borrower sees one loan at one blended rate; behind it sit two lenders, two ledgers, and one set of shared obligations.
The model matters because it is how formal credit reaches segments a bank cannot economically originate alone — MSME, gold, vehicle, affordable housing, agri — at bank-level pricing. It is also, structurally, the hardest kind of lending to keep provably correct: every obligation binds two institutions whose systems were never built to agree.
The 2025 Directions — what changed
The RBI’s Co-Lending Arrangements Directions 2025 (effective 1 January 2026) replaced the earlier CLM circulars and widened the frame: co-lending is no longer a priority-sector-only construct between banks and NBFCs — the Directions extend to all regulated entities and all loan segments, with a minimum retention requirement of 10% of each loan on the originating partner’s book. Legacy arrangements are being re-papered onto the new framework, and — consequentially for anyone watching this market — every RE must now publicly disclose its co-lending partner list each quarter, which makes the market’s real structure observable for the first time.
How an arrangement actually works, loan by loan
- Origination and commitment. The originating RE sources and underwrites; the partner RE takes its committed share under the master agreement (ex-ante commitment in the CLM-style model).
- The booking window. The partner’s share must be booked within 15 calendar days — and "booked" is not one event but four: disbursement, partner acceptance, cash reimbursement, and the general-ledger posting, each inside the window. This is the single most-missed control in practice.
- The blended rate. The borrower is charged one all-inclusive rate derived from both lenders’ pricing in proportion to their shares — recomputable, and expected to be recomputed.
- Escrow. All repayment flows route through an escrow account with a defined appropriation waterfall between the partners; collections and appropriations must reconcile to both books.
- Dual bureau reporting. Each RE reports its own share of the same loan to the credit bureaus — meaning one borrower, one loan, two files that must stay consistent.
- Classification sync. Borrower-level asset classification moves in step across both books: if the loan sours at one RE, it is sour at both — divergence is a finding, not a rounding error.
The market: size, shape, direction
NBFC co-lending assets under management crossed ₹1.1 lakh croreby 31 March 2025 (CRISIL), with projected growth of 35–40% annually as the 2025 Directions widen the addressable base — moderated near-term while legacy agreements re-paper. The market’s public structure is becoming visible through the new quarterly disclosures: SBI’s first official list showed 8 active co-lending arrangementsas on 31 March 2026 — a useful calibration, because cumulative press announcements had credited it with roughly three times that number. Active is not announced. On the NBFC side the fan-out runs wider: leading NBFCs disclose 12–16+ bank partners, which means a single NBFC may carry a dozen different partners’ assurance expectations at once.
The evidence burden — why arrangements strain
Every obligation above is testable, and inspection practice tests them at loan level: show the four booking events inside the window; show the escrow reconciliation; show both bureau files consistent; show classification moving in step; show the blended rate recomputed. In most pairs today that proof is assembled manually — reconciliation headcount through the quarter and an assembly sprint when an inspection or a partner audit lands. The days the two books disagree are rare; they are also the days that decide inspections and strain partnerships.
This is the gap an independent assurance overlayexists to close: recomputing the controls from both REs’ own records on a monitored cadence, so exceptions surface while they can still be fixed and the evidence dossier is a by-product of operating rather than a project. How that works — and what it deliberately is not (not a marketplace, not an LOS/LMS, never a credit decision) — is covered in AssureCLA and the deep-dives linked below: the booking window’s four events, the four ways dual bureau reporting goes wrong, why controls must be product-specific (gold, housing, vehicle, MSME, working capital), what an auditor-ready dossier contains, and a quarter in the life of a bank–NBFC pair.
Frequently asked
Is co-lending the same as direct assignment or securitisation?
No. In a CLA both REs originate and hold shares of the loan from the start under one agreement. Direct assignment transfers existing loans from one RE to another; securitisation pools loans into instruments. All three move risk between balance sheets — only co-lending creates the two-books-one-loan obligation set described here.
Who bears the compliance burden — the bank or the NBFC?
Both, jointly and continuously: retention, escrow, reporting and classification bind each RE for its share. In practice the bank carries the heavier supervisory weight, and banks therefore decide which NBFC partners earn limits and renewals — which is why an NBFC that can evidence its programme discipline wins partners faster.
Where can I see who runs co-lending arrangements today?
From the 2025 Directions onward, on the REs’ own websites: quarterly public disclosure of co-lending partner lists is mandatory. The first cycles are appearing now; within a few quarters the whole market’s arrangement graph will be public record.
Figures are attributed to their public sources (RBI Directions; CRISIL market estimates; REs’ own disclosures) as of July 2026 and summarised for practitioners — verify against the primary documents before relying on them. This guide is information, not legal or regulatory advice.