Co-lending
Also known as: co-lending arrangement, CLA
Definition
Co-lending is an arrangement, formalised through an ex-ante agreement, in which a regulated entity that originates loans and a partner regulated entity jointly fund a portfolio of secured or unsecured loans in a pre-agreed proportion, sharing revenue and risk.
More about Co-lending
The Reserve Bank of India (Co-Lending Arrangements) Directions, 2025 set out the framework [1]. Several provisions shape how loan software must work [1]:
- Each regulated entity retains at least 10 per cent of each individual loan on its books [1].
- Disbursements and repayments go through an escrow account with a bank [1].
- The borrower pays a blended interest rate weighted by each entity's funding share [1].
- If either entity classifies its exposure to a borrower as SMA or NPA because of a default on the co-lent loan, the same classification applies to the other entity's exposure to that borrower [1].
How this relates to LCode Technologies
LCode Technologies' Prosper supports co-lending in its loan origination system and works with multiple originators and lenders.
Frequently asked questions
What does co-lending software need to do?
Hold the funding split per loan, keep each partner's borrower account, route disbursements and repayments through escrow, compute the blended interest rate and share asset classification between partners.