What is the actual process of co-lending?

It involves 3 stage process:

1) In the first stage, the co-lending partners need to come together and assess whether this partnership has a potential interest, distribution capability and product fitment.

2) The second stage assesses the criteria of the co-lending partners. It is an entity-level fitment assessment. Some banks say they can co-lend with an NBFC with a Minimum of 100 Crore AUM.

3) Last but not least, the third stage assesses the commercial negotiation between the partners that involve operating cost, credit cost, and the margin amount the smaller partner is willing to contribute to the loan amount.

– Once all the above processes are complete, the partners sign the agreement.
– Then comes the integration discussion ( both the loan origination and loan management system should be in Sync), which typically may take a month or two, after which the disbursement is done, thus kicking off the co-lending partnership between the financial entities.
Please add if I missed any steps in the process.

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