The Reserve Bank of India has notified the Reserve Bank of India (Co-Lending Arrangements) Directions, 2025, reportedly bearing reference RBI/DOR/2025-26/139 and dated 6 August 2025, replacing the narrower co-lending scheme that had applied since 2020 only to priority sector loans extended jointly by banks and non-banking financial companies. The 2025 Directions are understood to have come into force from 1 January 2026, or from an earlier date that a regulated entity may choose to adopt under its own board-approved policy.
According to published summaries of the Directions, the revised framework widens the category of eligible lenders beyond banks and NBFCs to also include All India Financial Institutions such as NABARD, SIDBI and the National Bank for Financing Infrastructure and Development, and it extends co-lending beyond priority sector lending to cover a wider range of loan products. The Directions reportedly require each regulated entity in a co-lending arrangement to retain a minimum share, commonly cited as ten percent, of the individual loan on its own books throughout its tenor, rather than merely at origination.
Other requirements described in the commentary include a mandatory transfer of the originating entity's share of each loan to the other co-lender within a fixed window, reported as fifteen calendar days, a single blended interest rate charged to the borrower across both lenders, unified asset classification for the loan across the co-lending partners, and a cap on Default Loss Guarantee arrangements, reported at up to five percent of the co-lent loan portfolio. The Directions are also said to require enhanced disclosure to borrowers of the co-lending structure and the respective roles of each lender.
Taken together, commentators have described this as a shift from a relatively narrow, product-specific scheme to a broader, entity-based regulatory architecture governing co-lending across the banking and NBFC sector, bringing co-lending arrangements closer in rigour to other forms of structured lending that the Reserve Bank already regulates closely.