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Investing.com -- India’s central bank has issued final rules for co-lending arrangements between banks and non-bank financial companies (NBFCs), expanding these partnerships beyond priority sector lending while implementing stricter regulations.
The Reserve Bank of India (NSE:BOI) (RBI) announced Wednesday that the new framework will take effect January 1, 2026. Under these rules, lenders must retain at least 10% of individual loan exposures on their books and clearly communicate roles and responsibilities to borrowers.
The regulations aim to provide regulatory clarity and strengthen risk-sharing mechanisms in joint lending portfolios, according to the RBI.
The framework requires partner lenders to reflect their share of loans within 15 days of disbursement. It also restricts default loss guarantees to originating entities, with such guarantees capped at 5% of outstanding loans.
Asset classification will be implemented at the borrower level, meaning if a default is flagged by one lender, it will apply to the other lender’s exposure as well.
The final rules appear more restrictive than the April draft, which had allowed broader flexibility, including guarantees by the lender onboarding the borrower.
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