Skip to content
Free updates Login
BankingNABARD / RBI

RBI Co-lending Draft: Blended Rates and Fintech Feedback

23 May 20251 min read
BANKING & FINANCERBI Co-lendingDraft: BlendedRates and FintechFeedback23 May 2025safalsetu.com

Why in the news

RBI met fintech bodies for feedback on draft co-lending rules aimed at cheaper digital loans.

Key facts

  • Bodies: FACE, UFF (formerly DLAI) and FCC.
  • Blended rate: borrower’s rate is the weighted average of lenders’ rates.
  • Applies to all regulated entities, not only priority sector lending.
  • UPI credit line: fintechs wanted NBFCs allowed like small finance banks; RBI was wary on capital and compliance.
  • Fintechs cited better compliance after RBI’s October 2024 action against four NBFCs for excessive interest.
ModelWorking
CLM 1Banks and NBFCs originate and disburse jointly
CLM 2NBFC disburses; bank reimburses up to 80%

Exam angle

  • Blended rate = weighted average; CLM 2 reimbursement up to 80%.

Test yourself

1. In RBI's draft co-lending guidelines, the final lending rate is computed how?

The blended mechanism uses the weighted average of lenders' interest rates.

2. Under CLM 2, what share of the loan can banks reimburse to the NBFC later?

NBFCs disburse first and banks reimburse up to 80%.

3. Which group, formerly DLAI, took part in RBI's co-lending consultation?

UFF, the Unified Fintech Forum, was formerly DLAI.

This topic is part of Daily Current Affairs 23 May 2025 (13 topics).

All topics of the dayDay quizMay 2025

Read more