RBI's New Co-Lending Rules: An Urgent Action Plan for Lenders

Executive Summary: A New Era for Collaborative Finance

The Reserve Bank of India’s new Co-Lending Directions (CLA), issued on August 6, 2025, mark a turning point for India’s lending ecosystem. Effective January 1, 2026, these rules shift co-lending from a niche, priority-sector tool to a mainstream model across loan types and sectors. By broadening eligible partners, standardizing rules, and mandating deeper tech integration, RBI has created a scalable framework for future lending.

For banks and NBFCs, this is a growth catalyst. The rules improve capital efficiency, expand market reach, and reward tech-enabled players. But they also make manual, siloed systems obsolete. Winning in this new era requires modern, integrated, and automated platforms that turn compliance into a competitive advantage.

 

Key Changes and Their Business Impact

The new rules introduce three main shifts that affect your strategy, operations, and technology.

1.   A New Universe of Partnerships

The RBI has opened up the co-lending market significantly.

• Broader Partnerships: The old rules were mostly for banks and NBFCs lending to the priority sector. The new rules allow a wider range of partners, including NBFC-to-NBFC arrangements.

• All Loan Types Included: You can now co-lend for any loan category, such as personal loans, consumer durable loans, and unsecured business loans, not just priority sector loans.

• Lower Capital Lock-in: Each partner must keep at least 10% of every loan on their books. This is down from the previous 20% rule for originators, freeing up your capital to fund more loans.

2.   Standardized Economics and Transparency

The new guidelines focus on making the process transparent and easy for the customer.

• Mandatory Blended Rate: Borrowers must be charged a single "blended" interest rate. This is a weighted average of each partner's rate (relevant for the risk profile), making pricing clear and simple.

• Upfront Disclosures: All details about the partnership, roles, and pricing (including any additional fees) must be clearly stated in the Key Facts Statement (KFS) before the loan is signed.

• Single Point of Contact: The loan agreement must name one lender as the single point of contact for all customer service and grievance issues.

3.   Tighter Operations and Risk Management

The rules make deep system integration and clear risk management essential.

• Unified Asset Classification: If one partner marks an account as a Non-Performing Asset (NPA), the other partner must do the same for their share of the loan. This information must be shared in near real-time.

• Mandatory Escrow Account: All money, including disbursements and repayments, must flow through a dedicated escrow account. This ensures all transactions are transparent.

• Strict 15-Day Timeline: Partners must record their share of the loan on their books within 15 calendar days of disbursement. They also need to maintain the borrower’s account individually for their respective share.

• Capped Default Loss Guarantee (DLG): An originating partner can offer a DLG, but it is capped at 5% of the outstanding loan amount. This ensures all partners have "skin in the game."

 

Market Outlook: A Sector Poised for Growth

The RBI's new directions are expected to fuel major growth in co-lending. By expanding the model beyond the priority sector, the rules unlock new opportunities in high-growth areas. Industry experts predict the market could grow from ₹900 billion to ₹4,000 billion by 2030. This capital-light model is a huge advantage for tech-driven NBFCs, allowing them to scale quickly. It also helps banks reach new customers in Tier-2 and Tier-3 cities, expanding financial inclusion.

 

Takeaways: Your Co-lending Toolkit

To meet RBI’s requirements and capture the opportunity, executives can use the practical roadmap below to double down on the focus areas.

Phase 1: Review Your Strategy & Policy

• Identify new market opportunities (e.g., personal loans, unsecured MSME credit).

• Decide on new partnership models (e.g., with specialized HFCs or other NBFCs).

• Update your internal credit policy to include specific rules for co-lending, such as exposure limits, target segments, and partner selection criteria.

Phase 2: Update Legal & Documentation

• Draft a master co-lending agreement template that complies with the new directions.

• Update your loan agreement template to clearly disclose all partners and their roles.

• Revise your Key Facts Statement (KFS) template to accurately display the blended interest rate and other mandatory disclosures.

Phase 3: Prepare Technology & Operations

• Conduct a gap analysis of your current Loan Origination (LOS) and Management (LMS) systems. Can they support the new requirements?

• Start discussions with banks to plan for the setup and integration of escrow accounts.

• Map out your operational workflow to ensure you can meet the 15-day loan booking deadline.

• Design a process for real-time data synchronization with partners for unified NPA reporting.

• Update your credit bureau (CIC) reporting process to correctly report each lender's individual share of the loan.

Phase 4: Strengthen Partner Management

• Create a detailed due diligence checklist for vetting potential partners, including a thorough audit of their technology stack.

• Establish a clear process for monitoring partner performance and compliance on an ongoing basis.

The OneFin Solution: Turn Regulation into a Revenue Engine

Legacy systems are not built for this new, agile co-lending environment. OneFin provides the modern, configurable platform you need to succeed.

Challenge: Managing complex blended rates, separate partner ledgers, and automated payouts.

OneFin's Solution: Our platform supports diverse fee structures, automates all calculations and manages the entire cash flow and reconciliation through integrated escrow management. We have deep expertise in the CLM-1 and (now-deprecated) CLM-2 models.

Challenge: Meeting the 15-day booking rule and syncing NPA status in real-time.

OneFin's Solution: Our integrated ecosystem of LOS, LMS and accounting modules and API-first architecture ensure seamless, real­-time data exchange between you, your partners, and the escrow account, making compliance an automated, effortless process.

Challenge: Generating compliant documents like the KFS and CIC reports for every loan.

OneFin's Solution: Our platform automates critical compliance tasks. From generating borrower-facing KFS with blended APRs to creating individual RE reports for Credit Information Companies (CICs), we embed regulatory adherence into your workflow, minimizing manual effort and eliminating operational risk.

Ready to Build a Future-Proof Co-Lending Engine?

Don't just comply, compete! The RBI has laid out the blueprint for a more collaborative and efficient lending future. Let us show you how OneFin's end-to-end platform including configurable modules like LOS, LMS, Accounting System, Collection System, Digital Journeys etc. can help you reduce operational friction and turn the latest co-lending directions into your next big growth opportunity. Schedule a Demo here.