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  • Writer's pictureAnjali Verma

The Ultimate Guide to What Is Co-Lending

Table of Contents:

Through emerging technologies in financial sectors, lenders have been able to design and launch, customized financial products at lower costs. In the Fintech sectors in India, digital lending is expanding faster. According to a report, this sector is expected to reach a value of $350 billion by 2023.

However, liquidity has always been a problem. To prevent systemic liability, legacy banks have been hesitant to provide loans. The debt capital markets in India are still in their infancy and are governed by strict laws. The development of fintech in India has paved the way for co-lending, which is the solution to the liquidity crisis India is facing. Recently, RBI has established a framework for the co-origination of loans, where banks and non-banks are jointly lending funds to the priority sector. To increase loan flow to productive sectors, the RBI implemented the co-origination mechanism in response to the NBFCs' liquidity crisis. The focus of the policy is on long-term structural reforms rather than temporary incentives.

Meaning of Co-Lending:

Co-lending is the loan disbursement collaboration between a fintech company and a traditional lender. When traditional banks face trouble reaching all the sections of the economy, NBFCs or fintech help these lenders reach all the sections. The association permits fintech companies to find clients, evaluate credit, and disperse a small proportion of the loan amount. Fintech companies are lending alongside banks in some circumstances, focusing more on offering services like risk assessment to banks.

Co-Lending helps the partners to depend on each other to create a win-win situation which helps in opening the value for their clients. For co-lending, the partners may include banks, NBFCs, and housing finance companies (HFCs). NBFCs completely depend on their presence in the marketplace and understanding of niche customer segments, and banks provide the required capital. Co-Lending helps banks to reach into new sections of the economy and meet the priority sector lending target and they lower the cost of capital for NBFCs to grow.

Features of Co-Lending:

  • seamless document and customer information sharing between partners

  • completely automated procedures

  • Secure, scalable, and reliable platform

  • Set up credit risk assessment following the partners' risk policies.

  • API-based design with a multilingual solution for easy integration with lending ecosystem enablers

  • collaborating with reputable FinTech for full digitization

  • Full accounting with instant report production

  • Create reconciliation reports by combining partner inputs.

  • Ready to be deployed on the cloud

  • Straight Through Processing (STP) for end-to-end automation capabilities

  • Structure the repayment plans easily based on multiple parameters

List of Banks which is currently providing Co-lending services:

  • State Bank of India

  • Union Bank of India

  • Central Bank of India

  • IndusInd Bank

  • Yes Bank

  • Punjab National Bank

  • Bank of Baroda

Advantages of Co-Lending for the following partners:


  1. As NBFCs normally have a greater reach to the remotest areas of the country or underserved target groups. Hence banks can benefit from a huge pool of businesses and clients to lend to.

  2. Understanding customers and fulfilling their needs is the main goal for NBFCs and FinTech. thus the entire customer management process of the banks gets handled by these partners in the arrangement with its smooth and convenient processes, which helps customers to get a better customer experience.

  3. Due to the risk division between the two parties, banks get an advantage from an added sense of security and minimization of losses to manage the risk.


  1. NBFCs can take benefit from a co-lending arrangement to extend loans at lesser interest rates as compared to their competitors.

  2. Currently, new companies looking to enter the lending business can build credibility for their brand to eye catch their customers, through co-lending collaboration with big banks.

  3. NBFCs can reduce the losses on their loans in case of any bad debts through co-lending.


  1. FinTech provides a better customer experience during the entire process, retains them for a long time, and cross-sell financial products in the future.

  2. To go through a convenient lending process, it is not always required to pay a higher interest rate, as customers get lower interest rates due to banks being on board.

  3. Underserved customers in rural areas find a good fit in co-lending as they finally get access to lending products, from banks.

Benefits of Co-Lending:

Co-lending brings numerous benefits to everyone involved parties as banks, NBFs, financial institutions, and end borrowers.

  • Easy lender discovery

  • Credit criteria as per agreement

  • Depth across products

  • Escrow accounts

  • Access to self-serve API

  • Reconciliation module

  • Digital agreement signing

  • Quick loan recovery and disbursal

  • One-time API integration


From merely being a trendy term to being acknowledged by the RBI and having proper rules published for its application in the nation, co-lending had come a long way. Numerous start-ups and banks have begun working together to lend to specific economic sectors, and in the future, we can only expect to see an increase in the number of tech-driven loan applications.

When it comes to the finest tech-driven loan application, you can always go for SynoFin loan management software.

SynoFin, a brand by Synoriq is building India's holistic technology for NBFCs and is a leading software service-providing company in India. It provides the most configurable and extensible Online Loan Management System which consists of the best co-lending solutions for businesses.

Visit to know more about SynoFin Loan Management Software.

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