RBI permits co-lending between regulated entities from Jan 2026 with 10% loan retention
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Notification No. RBI/DOR/2025-26/139 DOR.STR.REC.44/13.07.010/2025-26, Dated: 06.08.2025
Introduction of Co-Lending Directions, 2025
The Reserve Bank of India (RBI) has issued the Co-Lending Directions, 2025, enabling regulated entities (REs) to enter into lending arrangements with other REs for the purpose of extending credit. This initiative is aimed at enhancing the availability of credit in the economy while ensuring compliance with the existing prudential regulatory framework.
Effective Date of Implementation
According to the notification, these Directions will come into effect from January 1, 2026. However, RBI has provided flexibility to regulated entities to adopt the framework earlier if they wish, based on their internal policies and readiness. This early adoption provision is expected to encourage faster integration of the new system within the financial ecosystem.
Minimum Retention Requirement
Under the revised guidelines, each RE participating in a co-lending arrangement will be required to retain at least 10% of the individual loans on its own books. This retention requirement is designed to ensure that all lending partners have sufficient skin in the game, promoting prudent lending practices and risk-sharing between entities.
Impact on Credit Expansion
The introduction of these directions is expected to widen the scope of credit delivery by leveraging the strengths of multiple lending partners. By enabling co-lending between regulated entities, RBI aims to foster greater financial inclusion, ensure better risk distribution, and facilitate efficient delivery of credit to different segments of borrowers.
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