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ARTICLE · 18 SEPTEMBER 2025

RBI's 2025 Co-Lending Regime: Balancing Prudence, Growth, And Protection

Corporate Professionals - Advisors & Advocates
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The Reserve Bank of India (RBI) has issued the Co-Lending Arrangements (CLA) Directions, 2025, effective January 1, 2026, replacing the earlier 2020 Co-Lending Model (CLM).

IndiaFinance and Banking
Nitesh Latwal
Nitesh Latwal
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Executive Summary

The Reserve Bank of India (RBI) has issued the Co-Lending Arrangements (CLA) Directions, 2025, effective January 1, 2026, replacing the earlier 2020 Co-Lending Model (CLM). These comprehensive guidelines expand the scope of co-lending beyond priority sector lending (PSL), while strengthening prudential safeguards and customer protection. This article reviews the journey from the 2020 circular, through the April 2025 draft framework, to the final August 2025 Directions, highlighting material changes, benefits for NBFCs and banks, compliance requirements, and a forward-looking analysis.

Under Existing CLM 2020

CLM is used to refer as a co-origination model where Banks and NBFCs come together to grant loans. The focus was to expand financial inclusion in priority sectors, including agriculture, MSME, etc, by increasing the flow of funds to these underserved and unserved sectors. NBFCs generally have depth and access to the ultimate beneficiaries,

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