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Co-Lending or Own Book Lending: Which Model Aligns With Your Strategy?

  • 31-Jan-2026
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Co-Lending or Own Book Lending: Which Model Aligns With Your Strategy?

India’s digital lending market is expected to cross $720 billion by 2030, creating massive opportunities for NBFCs and fintechs.
But as the ecosystem grows, one critical question defines long-term success:

Should you scale through co-lending or build your own lending book?

Both models can be powerful—if aligned with your capital strength, risk appetite, and strategic vision.

Let’s break it down.

Understanding the Two Lending Models

What Is Co-Lending?

Co-lending is a partnership model where an NBFC or fintech collaborates with a bank to jointly fund loans. Typically, the bank provides a larger share of capital, while the NBFC or fintech manages sourcing, underwriting, and servicing.

What Is Own Book Lending?

In own book lending, the NBFC funds loans from its own balance sheet, retaining full control over credit decisions, pricing, and customer relationships—along with full risk exposure.

Co-Lending: Faster Scale With Shared Risk

Co-lending has become increasingly popular due to its efficiency and capital advantages.

Key benefits include:

  • Faster portfolio scale-up
  • Access to low-cost bank capital
  • Shared credit risk
  • Lower capital adequacy pressure
  • Stronger unit economics in early stages

Best suited for:

  • Asset-light NBFCs and fintechs
  • New lending platforms
  • Digital-first originators
  • Businesses targeting rapid expansion

However, co-lending comes with reduced control and strict alignment with RBI co-lending guidelines and bank policies.

Own Book Lending: Control With Higher Responsibility

Building your own book offers autonomy—but demands strong fundamentals.

Key advantages include:

  • Full control over underwriting and pricing
  • Direct ownership of customer relationships
  • Greater flexibility in product design
  • Higher long-term profitability potential

Challenges to consider:

  • Higher capital requirements
  • Full exposure to credit risk
  • Greater regulatory and compliance burden
  • Balance sheet stress during downturns

Best suited for:

  • Well-capitalized NBFCs
  • Mature lenders with proven credit models
  • Institutions focused on long-term portfolio ownership

Side-by-Side Comparison

Factor Co-Lending Own Book Lending
Capital Requirement Lower High
Risk Exposure Shared Full
Speed of Scale Fast Gradual
Control Limited Complete
Cost of Funds Lower Higher
RBI Oversight High Very High

RBI Rules You Must Consider

Both models operate under strict RBI digital lending and NBFC regulations, including:

  • Co-lending framework compliance
  • Fair practices code
  • Data privacy and borrower consent norms
  • Capital adequacy and provisioning requirements
  • Regular reporting and audits

Non-compliance can disrupt partnerships or attract regulatory action.

So, Which Model Should You Choose?

The right model depends on:

  • Your capital strength
  • Risk tolerance
  • Desired speed of growth
  • Long-term profitability goals
  • Regulatory readiness

Many successful lenders start with co-lending and gradually transition to own book lending as capital and confidence grow.

Thinking of Launching a Lending or Co-Lending Business?

At NBFC Advisor, we help NBFCs and fintechs:

  • Evaluate co-lending vs own book strategies
  • Structure RBI-compliant lending models
  • Set up bank partnerships
  • Design scalable and compliant lending operations

📞 Contact Us for a Free Consultation

+91 93113 47006

Make the right lending choice—strategic, compliant, and future-ready.

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#Finance #RBI #FintechRegulations #LendingTransformation

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