Summary

Co-lending is a collaborative approach where lenders partner to extend their lending capabilities and reach. This concept is gaining popularity, particularly in priority sector lending, where banks and NBFCs are entering into co-lending arrangements. The Reserve Bank of India has introduced guidelines for co-lending, which provide a regulatory framework for such partnerships. Co-lending can be discretionary or non-discretionary, and the risk and rewards of the partnership should be shared between the co-lenders. The co-lending model offers benefits for both banks and NBFCs, allowing them to leverage their respective strengths and expand their lending portfolios.