A High Court has ruled on a consumer grievance arising from a co-lending arrangement between a bank and an NBFC under the Reserve Bank of India's co-lending model, in which the two entities jointly fund a loan in an agreed proportion: typically with the bank funding the larger share and the NBFC originating and servicing the loan. The borrower, a small transport operator, had approached the court after both the bank and the NBFC each denied responsibility for correcting an error in his loan account, with each entity claiming the grievance fell within the other's operational domain.
The Court held that RBI's co-lending framework does not create a shield behind which either partner can hide from a genuine customer grievance. Both the originating NBFC and the partner bank remain independently bound by their respective fair practices code obligations and grievance redressal responsibilities for the portion of the loan attributable to each, and a borrower cannot be made to litigate a jurisdictional dispute between the two lenders before getting a substantive response to a legitimate complaint.
The Court directed the bank and the NBFC to jointly reconcile the borrower's account within a fixed period and file a compliance report, observing that co-lending arrangements are structured for the lenders' commercial convenience and cannot be allowed to degrade the single-point accountability a borrower is otherwise entitled to expect.