Co-Lending Operations in 2026: The 5 Workflows You Need Before You Sign

NBFC Operations Blogs
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Co-lending agreements are signed in a boardroom over a term sheet. The operational reality surfaces three months later when the first reconciliation needs to happen and no one’s system is talking to anyone else’s.

Here are the five workflows every NBFC needs in place before the agreement is executed. 

1. Risk split calculation at disbursement

The new RBI rules require both bank and NBFC to retain at least 10% of every co-lending loan. This means your LOS must calculate the exact split at the time of disbursement: not estimated, not calculated in a spreadsheet after the fact, but locked as a system field that flows through to your LMS. 

Without this: you’re manually tracking each party’s exposure, which creates reconciliation errors and FLDG tracking issues downstream. 

2. Settlement timeline management

The bank’s share must be transferred within 15 days of disbursement. This is a compliance deadline, not an operational guideline. Your LMS needs to track the settlement date for every co-lending disbursement, generate alerts at day 10 and day 14, and escalate to a human owner if settlement hasn’t been confirmed by day 14. 

Without this: settlements slip. You find out at month-end when reconciliation fails, by which point you’re already in technical violation. 

3. FLDG utilisation dashboard

With the 5% cap on FLDG, you need real-time visibility on FLDG consumed versus the limit for each active agreement. If you have multiple co-lending arrangements, the cap applies to aggregate utilisation. You can’t max out each agreement independently. 

Without this: you’ll breach the cap without knowing it until an audit flags it. 

4. Two-ledger loan accounting

Under co-lending, two loan accounts exist for every borrower: one at the bank (their 80%) and one at the NBFC (their 20%). Both need to reflect the same principal outstanding, interest accruals, and prepayment positions. A part-prepayment by the borrower must flow through to both ledgers simultaneously and correctly. 

Without this: your books and the bank’s books drift over time. Reconciliation becomes a monthly war. 

5. FLDG invocation workflow

When an account hits NPA, the FLDG must be invoked within 120 days of classification. This is the window before the guarantee lapses. Your system needs to flag this automatically at NPA classification and assign it to a named owner in the ops team. 

Without this: guarantees lapse. You’re holding the full exposure with no recourse. 

Co-lending is a powerful product structure. These five workflows are the difference between running it as a scalable programme and running it as a compliance liability. 

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