What was announced?
The Reserve Bank of India (RBI) released a draft framework titled "Reserve Bank of India (Co-Lending Arrangements) Directions, 2025". This framework aims to establish a comprehensive set of guidelines for co-lending arrangements between regulated entities (REs), enhancing credit delivery and financial inclusion.
When?
The draft was issued in April 2025 and is currently open for public comments.
Applicability
The draft directions apply to the following Regulated Entities (REs):
- All Commercial Banks (excluding Small Finance Banks,
- Local Area Banks, and Regional Rural Banks)
- All India Financial Institutions (AIFIs)
- Non-Banking Financial Companies (NBFCs), including Housing Finance Companies (HFCs)
Impact on Banks
Unified Framework:
Establishes a harmonized regulatory framework for co-lending arrangements across all REs.
Operational Guidelines:
Provides detailed instructions on operational aspects, including loan sourcing, servicing, and recovery processes.
Interest Rate and Fee Structures:
Outlines permissible interest rate models and fee-sharing arrangements between co-lending partners.
Default Loss Guarantee (DLG):
Specifies conditions under which DLG can be offered, ensuring risk-sharing between co-lenders.
Asset Classification Norms:
Clarifies the treatment of co-lending exposures in terms of asset classification and provisioning. Regulatory Reporting: Mandates comprehensive reporting requirements to ensure transparency and regulatory compliance.
All regulatory changes arising from this announcement will be addressed as part of the OneSumX Regulatory Update Services (RUS). Learn how to be prepared for upcoming regulatory changes by visiting OneSumX for Regulatory Reporting.