Direct Assignment vs Co-Lending: Why Banks Prefer DA
Why in the news
Even after co-lending relaxations, banks lean towards buying NBFC loans outright.
| Direct assignment | Co-lending | |
|---|---|---|
| Model | Bank buys a loan pool from an NBFC, no SPV | Bank and NBFC lend jointly, sharing risk and returns |
| Effort | Simpler | Tougher under new RBI rules (15-day window, tech integration) |
Key facts
- DA gives ownership and repayment rights, frees NBFC capital, lets banks choose quality loans and helps priority-sector targets.
- Why banks like it: clean risk transfer, simplicity, higher-margin loans, instant portfolio growth.
- An SPV/SPE is a separate subsidiary that isolates risk for a specific transaction, with its own balance sheet.
Exam angle
- DA = no SPV; co-lending = joint lending.