RBI Expands Co-Lending Framework for Broader Credit Access

The Reserve Bank of India (RBI) proposes an extensive regulatory framework for co-lending arrangements. Previously restricted to priority sector loans, the new draft aims to accommodate a wider range of credit needs. Key elements include segmentation of roles, borrower criteria, and interest rate regulations.

The Reserve Bank of India (RBI) unveiled a comprehensive draft framework to broaden co-lending arrangements beyond priority sector loans. This policy shift seeks to extend credit access to diverse borrower segments, addressing the evolving financial landscape's needs comprehensively.

Initially, co-lending regulations were confined to partnerships between banks and Non-Banking Financial Companies (NBFCs) targeting priority sector loans. However, the new regulatory framework encompasses all potential co-lending arrangements, providing clear guidelines on revenue and risk sharing among regulated entities.

The framework specifies the detailed criteria for borrower selection, terms and conditions of lending partnerships, and clarity on the roles of sourcing and servicing entities. The RBI is soliciting public feedback on this draft framework to ensure a robust and sustainable credit ecosystem.

(With inputs from agencies.)