Archive · 8 Aug 2025
RBI Tightens Co-Lending Rules for Banks, NBFCs
Imagine banks and other lenders working together to give out loans.
The RBI, which is like the financial rule-maker, has new rules for this.
Starting in January 2026, the rules say that both types of lenders must keep at least 10% of each loan themselves.
They can also agree that one lender covers some losses up to 5%.
Also, if a borrower has trouble paying back, both lenders must agree on the same status.
This helps make lending fairer, encourages sharing information, and could make it easier for small businesses and people with less credit history to get loans.
RBI mandates banks and NBFCs to retain at least 10% of each co-loan.
Revised guidelines aim to improve transparency and risk-sharing.
Loan-originating entities can provide a default loss guarantee up to 5%.
Borrower-level asset classification is mandated for co-lending arrangements.
New rules seek to enhance coordination and reduce arbitrage.
- Who
- RBI (Reserve Bank of India), banks, and NBFCs.
- What
- Revised guidelines for co-lending arrangements between banks and NBFCs.
- When
- Effective January 1, 2026.
- Where
- India.
- Why
- To strengthen transparency, accountability, and risk-sharing in co-lending.
Potential Challenges
Expected Benefits
Financial Impact
Potential Challenges
Margins may be affected due to blended interest rates and retention norms.
Expected Benefits
The rules create more equitable and constructive competition.
- Regulation Issuing Body
- Reserve Bank of India (RBI)
- Effective Date
- January 1, 2026
- Minimum Loan Retention
- 10% of each loan
- Default Loss Guarantee (DLG) Limit
- Up to 5% of total outstanding loans
- Entities Involved
- Banks and Non-Banking Financial Companies (NBFCs)