Co-Lending or Own Book Lending? Choosing the Right Model for Your Growth Strategy
India’s digital lending ecosystem is entering a decisive decade. With the market projected to cross USD 720 billion by 2030, NBFCs and fintech founders face a critical strategic question:
Should you scale through co-lending partnerships—or build your own loan book?
Both models are powerful. The right choice depends on capital strength, risk appetite, compliance readiness, and long-term vision.
Understanding the Two Lending Models
1. Co-Lending Model (CLM)
Under RBI’s co-lending framework, banks and NBFCs jointly originate loans, sharing risk and returns in a pre-agreed ratio.
Key Benefits of Co-Lending
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Faster scale without heavy balance-sheet pressure
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Access to low-cost capital from banks
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Risk sharing reduces exposure on NPAs
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Ideal for new NBFCs and fintech-led platforms
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Strong fit for MSME, retail, and priority sector lending
Key Limitations
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Limited pricing and product flexibility
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Dependence on partner bank’s credit policy
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Higher coordination and reporting requirements
2. Own Book Lending
In this model, the NBFC lends entirely from its own balance sheet, retaining full ownership of the customer and portfolio.
Key Benefits of Own Book Lending
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Complete control over underwriting, pricing, and products
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Stronger customer relationships and lifetime value
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Higher long-term profitability if managed well
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Flexibility to innovate across segments and tenures
Key Challenges
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Higher capital and liquidity requirements
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Full exposure to credit and regulatory risk
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Greater RBI scrutiny and compliance obligations
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Slower scale without strong funding access
Side-by-Side Comparison
| Factor | Co-Lending | Own Book Lending |
|---|---|---|
| Capital Requirement | Low | High |
| Risk Exposure | Shared | Fully borne |
| Speed of Scale | Fast | Moderate |
| Control & Pricing | Limited | Full |
| Customer Ownership | Shared | Complete |
| RBI Compliance Load | Moderate | High |
| Best For | Early-stage NBFCs, fintechs | Mature NBFCs with capital |
RBI Regulations Matter—A Lot
Both models operate under strict RBI oversight:
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Co-Lending must comply with RBI’s Co-Lending Guidelines, risk-sharing norms, reporting standards, and customer protection rules
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Own Book Lending requires full compliance with capital adequacy, provisioning, KYC/AML, digital lending guidelines, and governance norms
Non-compliance in either model can lead to restrictions, penalties, or suspension of operations.
Which Model Is Right for You?
Choose Co-Lending if:
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You want to scale quickly with limited capital
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Risk sharing is a priority
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You are fintech-driven or early-stage
Choose Own Book Lending if:
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You have strong capital and funding lines
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You want full control and higher long-term margins
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You are building a long-term lending franchise
Many successful players start with co-lending and gradually transition to own book lending as capital and confidence grow.
Planning to Launch a Lending or Co-Lending Business?
The success of either model depends on:
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Correct business structuring
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The right RBI-compliant license
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Proper partner agreements and risk frameworks
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End-to-end compliance from day one
📞 Contact us for a free consultation: +91 93113 47006
We help NBFCs and fintechs design, license, and scale lending models—the right way.
Final Takeaway
Co-lending fuels speed.
Own book lending builds depth.
Strategy—not hype—should decide your path.
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