Mumbai: Industry body FICCI has written to the Reserve Bank of India (RBI), urging it to retain the existing co-lending rules that allow non-banking financial companies (NBFCs) to originate loans and later sell up to 80% of those to banks. The appeal comes in response to a draft circular from the RBI proposing a shift to a joint lending model, where both banks and NBFCs disburse loans simultaneously.
In its submission, FICCI has argued that scrapping the current co-lending structure, often referred to as ‘track 2’, would be highly disruptive and could significantly constrain credit access for key customer segments and sectors. The industry body said the proposed changes would force NBFCs to scale back operations, leading to job losses and undermining the effectiveness of co-lending partnerships.
“The repeal of the November 5, 2020, circular would be highly disruptive and risk constraining credit availability to vital customer segments and industry sectors,” FICCI said in the letter reviewed by ET. “In the short- to mid-term, non-banks may have to scale back operations, leading to job losses in the industry. We therefore urge the RBI to preserve ‘track 2’ co-lending and continue fostering a regulatory environment conducive to financial inclusion.”
Under the ‘track 2’ framework, NBFCs originate loans in line with a mutually agreed credit policy and assign a majority portion to partner banks via direct assignment, benefiting from a waiver of the minimum holding period. According to ICRA’s April 2025 report, co-lending assets under management (AUM) reached ₹80,000 crore by the end of March 2024, reflecting strong growth under existing model.
FICCI has expressed concerns that eliminating this framework would hinder operational flexibility and impair the practical viability of co-lending. The model, which mandates simultaneous disbursal and underwriting by both banks and NBFCs, is expected to increase risk exposure, strain liquidity, and introduce operational inefficiencies, it said.
