New RBI Rules for Co-Lending from Jan 2026

The Reserve Bank of India (RBI) has released its final guidelines on co-lending arrangements, introducing key changes to enhance transparency and risk-sharing in such partnerships. The updated framework will be effective from January 1, 2026.

Minimum Loan Retention Requirement

Under the new norms, each lender participating in a co-lending arrangement (CLA) must retain at least 10% of the loan originated in its own books. This provision aims to ensure that all parties involved share the credit risk fairly and maintain skin in the game.

Additionally, the loan originator must transfer the loan to the co-lender within 15 days of origination. Failure to do so will result in the loan not being classified under a co-lending arrangement.

Expanded Scope of Co-Lending

Previously, co-lending, introduced under the November 2020 norms, was limited to banks and non-banking financial companies (NBFCs), where NBFCs originated priority sector loans for banks and retained at least 20% of the exposure.

Now, the RBI has expanded the scope to allow co-lending between:

• All commercial banks (excluding small finance banks)
• Financial institutions
• NBFCs, including housing finance companies

This change will facilitate a wider range of lending partnerships, covering both secured and unsecured loan segments.

Digital Lending Provisions

Digital lending arrangements will remain governed by the RBI (Digital Lending) Directions, 2025, ensuring compliance with transparency, data privacy, and consumer protection standards.

Also Read: RBI Simplifies Banking: New Re-KYC and Claims Process Announced!

Conclusion

The RBI’s revised co-lending framework marks a significant step towards promoting collaborative lending while ensuring prudent risk-sharing. By mandating a minimum 10% loan retention and broadening the scope of eligible participants, the regulator aims to strengthen the stability of the lending ecosystem and improve credit flow across sectors.

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