RBI Draft Co-Lending Framework for All Loans
Why in the news
The RBI released a draft to widen co-lending so that more loan types can use this joint-lending channel.
Key facts
| Aspect | Existing norms | Draft proposal |
|---|---|---|
| Participants | Banks and NBFCs | Commercial banks and NBFCs; RRBs, SFBs, LABs excluded |
| Loan types | Priority sector only | Priority and non-priority |
How it works
- A Co-Lending Arrangement (CLA) lets two institutions disburse a loan together in an agreed ratio.
- Banks can still claim PSL credit for their share.
Disclosures required
- Borrower segments, loan terms and pricing, exposure limits, risk-sharing deals.
Significance
- Better financial inclusion and credit flow; diversification and capital efficiency for lenders.
Exam angle
- CLA means Co-Lending Arrangement.
- Excluded: RRBs, SFBs, Local Area Banks.