Lenders must keep 10% of loan in co-lending: RBI

In its draft framework, RBI proposed co-lending arrangements to be widened to all regulated entities

- Anshika Kayastha

The Reserve Bank of India (RBI) on Wednesday issued final guidelines on co-lending arrangements, mandating that each lender that is part of such a mechanism must keep at least 10% of the loan originated on its book.

The final norms also require the loan originator to transfer the loan to the co-lender within 15 days of the loan being originated, in the absence of which the loan will not be considered a co-lending arrangement, according to an RBI circular.

Currently, co-lending arrangements, as per the November 2020 norms, are allowed only between banks and NBFCs, wherein only NBFCs are allowed to originate priority sector loans for banks, and are required to hold at least 20% of the loan on their books.