RBI Issued Final Co-lending Norms to Enhance Risk Sharing and Transparency

Current Context: RBI released final co-lending norms on August 6, 2025, effective from January 1, 2026.

• Norms apply to scheduled commercial banks (excluding SFBs, RRBs, LABs), All-India Financial Institutions, and NBFCs including HFCs.
• Each lender must retain a minimum 10% of every loan on its own books to ensure risk participation.
• Default Loss Guarantee (DLG) is restricted to 5% of the total outstanding pool.
• Loan portions must be transferred to co-lending partners within 15 days of disbursement.
• Borrowers will be charged a blended interest rate, reflecting the weighted average of partner lenders’ rates.
• If any lender classifies a loan as NPA/SMA, all partners must follow; escrow accounts and public disclosures are mandatory.

Question:

Q.1 As per the Reserve Bank of India (RBI) guidelines, what is the minimum percentage of every loan that each lender must retain on its own books under co-lending arrangements?
a) 5%
b) 7.5%
c) 10%
d) 15%

Answer: c) RBI requires each lender to retain at least 10% of every loan on its books to ensure genuine risk sharing.