NBFC Co-Lending RBI Framework India — Bank Partnership Software 2026

NBFC Co-Lending RBI Framework India — Bank Partnership Software 2026

RBI's Co-Lending Model (CLM), introduced through circular RBI/2020-21/63, allows banks and NBFCs/HFCs to jointly originate loans for priority sector lending. The model leverages the NBFC's customer reach and underwriting expertise with the bank's lower cost of funds — creating a win-win: borrowers get cheaper loans, NBFCs get bank capital, and banks meet Priority Sector Lending (PSL) targets.

Co-lending is complex from a technology perspective: each loan requires a split between bank (80%) and NBFC (20%) at the asset level, with separate accounting, reporting, and collection tracking for each entity's share.

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How Co-Lending Works

Origination
NBFC originates the loan — customer interface, KYC, underwriting, and sanction are done by the NBFC using its own processes and systems.

Joint Credit Decision
Credit assessment is shared: the NBFC does primary underwriting, the bank does secondary review for loans above a threshold. Both entities must approve before disbursement.

Disbursement
- Bank's share (typically 80%): disbursed from bank's books
- NBFC's share (typically 20%): disbursed from NBFC's books
- Borrower receives the combined amount in one disbursement

Loan Account
The borrower has one loan account with one EMI. Behind the scenes, the EMI is split between bank and NBFC shares.

Interest Rate
The blended rate to the borrower is a weighted average of bank and NBFC rates — lower than standalone NBFC rate because of bank's cost advantage.

PSL Classification
The bank's 80% share gets PSL classification. This is the bank's primary motivation for the partnership.

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MICS Co-Lending Software Features

Partnership Configuration
- Bank partner master: bank name, IFSC, co-lending agreement terms
- Product mapping: which loan products are co-lent (e.g., MSME loans, agriculture, housing)
- Split ratio configuration: default 80:20 or custom per agreement
- Interest rate configuration: bank rate, NBFC rate, blended rate computation

Joint Loan Origination
- NBFC originates and underwrites loan in MICS LOS
- Eligible-for-CLM flag: system identifies loans that qualify for co-lending (priority sector criteria)
- Loan file shared with bank system via API integration or secured portal
- Bank secondary review: bank credit officer approves / rejects in bank's system
- Joint sanction: both approvals recorded before disbursement trigger

Disbursement Processing
- Disbursement instruction: MICS triggers both NBFC and bank disbursements
- Bank's share: disbursed by bank directly or via escrow to borrower
- NBFC's share: disbursed from NBFC's books
- Confirmation: both disbursements confirmed before loan is live

Loan Account Splitting
- Each co-lent loan has two sub-accounts in MICS: NBFC's 20% and Bank's 80%
- EMI split: borrower's EMI broken into bank share and NBFC share in exact proportion
- Interest accrual: separate for each entity's share
- Principal reduction: proportional

Collection and Settlement
- NACH mandate: single mandate for full EMI
- On collection: MICS splits receipt into bank's and NBFC's share
- Bank's share settlement: transferred to bank within agreed settlement cycle (daily or T+1)
- Settlement report: daily reconciliation of amounts transferred to bank

NPA Management
- If loan goes NPA: both shares affected proportionally
- NPA reporting: both the NBFC and bank must classify their share as NPA
- Provisioning: each entity makes provision on their share per their respective regulations
- Recovery: proceeds split in proportion to principal outstanding

PSL Reporting
- Bank's PSL data: MICS generates report showing PSL-eligible co-lent portfolio for bank's regulatory filing
- Category-wise: agriculture, MSME, housing, weaker sections

Regulatory Reporting
- NBFC's CIMS: co-lent loans reported — NBFC's 20% share in portfolio
- Bank's BSR returns: bank's 80% reported in bank's regulatory returns
- Reconciliation: NBFC and bank shares must reconcile to borrower outstanding

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Pricing

- Co-lending module: Rs. 20,000 additional per month over standard NBFC software
- Integration with specific bank system: custom one-time setup (Rs. 1,00,000 - 3,00,000)
- Pilot (10 co-lent loans): fixed fee to demonstrate integration before full deployment

Free co-lending software consultation: +91 9355273535 | admin@mics.asia