RBI Circular on Co-Lending Arrangements 2025 [PDF]

The Reserve Bank of India (RBI) has issued new guidelines for Co-Lending Arrangements (CLA) to bring more transparency and accountability in such partnerships between regulated entities (REs), such as banks and non-banking financial companies (NBFCs).

As per the new directions, each RE involved in a co-lending arrangement must retain at least 10% of each individual loan in its own books, ensuring shared risk and responsibility. The credit policy of each RE must now include detailed provisions related to co-lending, such as internal limits on the proportion of lending under CLAs, identification of target borrower segments, due diligence of partner entities, and customer service and grievance redressal mechanisms.

Additionally, the agreement signed between co-lending partners must clearly outline the terms and conditions of the arrangement, borrower selection criteria, specific products and areas of operation, fees for lending services, division of responsibilities, timelines for sharing key information, and the framework for customer protection and complaint resolution.

Furthermore, the loan agreement with the borrower must include upfront disclosure about the roles and responsibilities of each RE—such as who will source or service the loan—and identify which entity will serve as the single point of contact for the customer. Any change in the customer interface must be communicated to the borrower in advance.

The agreement should also include clear provisions for customer protection and a robust grievance redressal mechanism to ensure borrower rights are safeguarded throughout the loan tenure.

Click here to download RBI Circular on Co-Lending Arrangements