RBI's revised co-lending norms likely to boost NBFC growth: Crisil

The revised norms allow Direct Lending Guarantees across loan types and reduce the minimum loan retention threshold for NBFCs to 10%, says Crisil

The revised co-lending guidelines of the Reserve Bank of India (RBI) are expected to increase growth opportunities for non-banking finance companies, rating agency Crisil said. 

It also said that the new norms will expand regulatory oversight of the segment by extending the arrangements to all regulated entities and to all forms of loans, “The revised directions will increase growth opportunities for NBFCs over the long term because their applicability extends to such arrangements between all REs and all forms of loans, whether secured or unsecured,” Malvika Bhotika, director, Crisil Ratings. 

“Further, the directions require each  regulated entities (RE)  to retain a minimum 10 per cent share of the loans in their books, compared with a minimum 20 per cent exposure requirement for NBFCs currently, which should particularly benefit mid-and-smaller NBFCs that face higher funding constraints,” she added. 

The co-lending assets under management of NBFCs have seen healthy traction over the past few years and are estimated to have crossed ₹1.1 trillion as of March 31, 2025, said the ratings agency. The revised guidelines introduce an important change by allowing originating REs to provide Direct Lending Guarantees (DLG) of up to 5 per cent of loans across all forms of lending, as opposed to the current restriction to digital lending. This move is expected to enhance risk and reward sharing among co-lending partners.

Another positive step is the requirement for all partners in a co-lending arrangement to follow a consistent asset classification for a given loan exposure. This will ensure uniform risk assessment and transparency in borrower profiling. 

The revised norms are applicable from January 1, 2026, or from any earlier date as decided by a RE as per its internal policy.