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by Rakesh Waghela

3.G Co-lending module

Purpose

Section titled “Purpose”

Run multi-lender economics on a single origination engine. For every co-lent loan, manage two ledgers, two policies, two reporting streams, and one borrower experience. See Section 7 for the deep architecture.

In-scope features

Section titled “In-scope features”
  • Partner lender onboarding — master, KYC, agreement, IT integration, sandbox.
  • Partner policy configuration — partner’s credit rules as machine-readable rules; versioned.
  • Product–policy mapping — which products / segments are co-lent with which partner.
  • Loan allocation rules — funding split (80:20, 70:30, etc.); allocation logic when multiple partners are eligible.
  • First-loss / DLG configuration — if any DLG (typically with non-RE partners; co-lending between two REs typically does not use DLG).
  • Pool / programme creation — define pools by product, segment, vintage.
  • Loan splitting — per loan, compute originator and partner shares of principal, interest, fees.
  • Waterfall rules — order of allocation of repayments (principal vs interest vs fees).
  • Borrower communication — KFS shows both lenders; sanction letter discloses both.
  • Agreement generation — co-lending disclosure addendum; partner-specific clauses.
  • Partner approval workflow — real-time API approval or batch / queue approval; per partner.
  • Real-time API handoff — submit loan, receive approval, book on partner books.
  • Batch handoff — daily / hourly file based handoff for partners without real-time API.
  • Partner lender dashboard — partner logs in to see their loans, portfolio, MIS.
  • Portfolio MIS — per-partner, per-product, per-cohort.
  • Reconciliation — escrow vs partner ledger vs originator ledger.
  • Settlement — periodic sweep from escrow to each lender.
  • Exception handling — failed allocations, partner-side errors.
  • Buyback / substitution — when a loan needs to move (e.g., partner exits) — replace with another loan in the same pool, or buy back.
  • DLG monitoring — cap, invocation pipeline (see DLG).
  • Partner-wise delinquency view.
  • Partner-wise yield, vintage, ECL analysis.
  • Regulatory reporting per partner.

Out of scope

Section titled “Out of scope”
  • Decision engine itself (it’s in 3.E) — but co-lending requires it to run multiple partner policies in parallel.
  • LMS core — see 3.J — co-lending sits on top of LMS, not inside it.

Key entities

Section titled “Key entities”
  • PartnerLender — master.
  • PartnerProduct — what products are co-lent with this partner.
  • PartnerPolicy — versioned rules per partner.
  • CoLendingAgreement — Master Co-Lending Agreement reference + amendments.
  • Pool — definition of a co-lending pool / programme.
  • LoanAllocation — per loan, the share split, partner reference, agreement.
  • WaterfallRule — repayment allocation order.
  • SettlementBatch — per period, per partner.
  • Dlg — agreement-level DLG cap and instrument.
  • BuybackEvent — per substitution / buyback.

Key workflows

Section titled “Key workflows”
  1. Partner onboarding — diligence → MSA + Co-Lending Agreement → IT integration → sandbox testing → live with ramp-up.
  2. Per-loan allocation — application passes both policies → split per ratio → both lenders book → disburse from escrow → confirm to partner.
  3. Repayment waterfall — repayment arrives in escrow → split per waterfall → settle to each lender per period.
  4. NPA lockstep — when borrower turns NPA, both lenders classify same day.
  5. DLG invocation — NPA → eligibility → invoke → debit FD / BG / cash → credit partner.
  6. Buyback / substitution — pool exit triggers buyback or substitution per Master Agreement.

Integrations

Section titled “Integrations”
  • Partner core banking / loan booking — usually SFTP file + API combination.
  • Sponsor bank for escrow — daily statements, NEFT / RTGS for settlement.
  • Per-partner reporting — file formats specified per partner.

APIs

Section titled “APIs”

See Section 7 — Co-lending APIs for the full contract specifications.

Events emitted

Section titled “Events emitted”
  • partner.onboarded / partner.deactivated
  • loan.allocated (with partner share)
  • loan.partner.approved / loan.partner.declined
  • settlement.completed / settlement.failed
  • dlg.invoked / dlg.repaid
  • buyback.executed / substitution.executed
  • reconciliation.exception (high priority)

Edge cases

Section titled “Edge cases”
  • Partner approves but originator’s book is full — exposure cap breach scenario.
  • Originator’s policy approves but partner declines — fall back to own book if eligible, otherwise decline.
  • Partner system down at submission — queue with retry; SLA tracked.
  • Settlement mismatch — auto-flag; reconciliation queue.
  • Pool exit mid-cycle — substitution from same-cohort eligible pool.
  • Multiple partners eligible for the same loan — allocation policy (rotation, capacity-aware, partner-priority).

Compliance touchpoints

Section titled “Compliance touchpoints”
  • RBI Co-Lending Guidelines — see 2.6.
  • DLG Guidelines — 5% cap; see 2.5.
  • TLE Master Direction — relevant for CLM-2 assignment hygiene.
  • Outsourcing MD — the partner relationship is governed.
  • Data sharing — borrower data shared with partner only as needed; consent-based.

MVP vs production

Section titled “MVP vs production”
FeatureMVPProduction
Single partner integration✓✓
Multi-partner allocation(Phase 3)✓
Real-time API handoff✓ (if partner supports)✓
Batch handoff✓✓
DLG monitoringIf DLG arrangement exists✓
Buyback / substitution(Phase 3)✓
Partner dashboardBasic MISFull portfolio + drill-down
Reconciliation engineManual ops at MVPAuto-recon + exception queue

Related: 1.2 Co-lending, 2.6 Co-lending guidelines, 7. Co-lending deep dive, 13.12 Co-lending backlog.