Co-Lending Default Handling Strategies - CloudBankin – A digital loan software by Habile Technologies

Before the new FLDG guidelines, In Co-Lending, What happens in case the borrower defaults ?

In a typical arrangement like (Bank – 80%, NBFC -20%)

In case of borrower defaults, the most common way is

  1. the Bank will tell the NBFC to 100% take the default loan onto NBFC’s balance sheet. OR
  2.  the NBFC should inform the overdue instalments to the Bank. The Bank will sweep out the overdue amount from their FLDG to compensate

Hence, the NBFC has to be very prudent in the collection.

That’s why, while getting into the commercial arrangement with a Bank on Colending, the NBFC has to factor in all the losses.

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