7.1 Operating model and flows

CLM-1 (synchronous co-origination) — end-to-end flow

Steps

1. Borrower applies (via NBFC's channel / partner / embedded / DSA).
   ↓
2. NBFC runs full underwriting flow.
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3. Decision engine runs BOTH NBFC's policy AND partner's policy.
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4. Outcomes possible:
   a) Both approve → CO-LEND
   b) Only NBFC approves → OWN BOOK (if NBFC product allows standalone)
   c) Only partner approves → declined for co-lending; flag for own-book if eligible
   d) Both decline → DECLINE
   ↓
5. For CO-LEND path:
   a) Compute split (e.g., 80:20 partner:NBFC).
   b) Generate KFS showing both lenders.
   c) Borrower e-signs agreement + KFS + NACH.
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6. Booking handoff:
   a) NBFC books its share on its books.
   b) NBFC sends booking instruction to partner via API / SFTP.
   c) Partner books its share.
   d) Both lenders confirm via ack.
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7. Disbursement:
   a) Partner releases its share to ESCROW.
   b) NBFC releases its share to ESCROW.
   c) Combined amount disbursed to borrower from ESCROW with single UTR.
   ↓
8. LMS:
   a) NBFC creates the loan account in its LMS.
   b) NBFC mirrors to partner via daily MIS.
   c) Borrower sees a single loan + EMI.
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9. Repayments:
   a) Borrower repays via NACH / UPI AutoPay / direct.
   b) Funds land in collection ESCROW.
   c) Waterfall splits per ratio.
   d) Daily settlement: NBFC's share to NBFC, partner's share to partner.
   ↓
10. NPA lockstep:
    a) Borrower DPD breaches 90 → NPA.
    b) Both lenders classify same day (lockstep).
    c) NPA reflected in monthly bureau submission by both.
    ↓
11. Collections (single-point):
    a) NBFC owns collection.
    b) Partner sees status via MIS; doesn't independently call.
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12. Recovery split per ratio.
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13. Closure: NOC, mandate cancellation, partner notified.

Key data hand-offs

Step	Format	Frequency	Owner
Loan booking instruction	API (preferred) or SFTP file	Real-time / hourly	NBFC → partner
Partner ack	API webhook	Real-time	Partner → NBFC
Daily MIS	SFTP CSV or API	Daily	NBFC → partner
Settlement instruction	Bank file	Daily / weekly	Sponsor bank instruction by NBFC
Reconciliation file	CSV	Daily	Sponsor bank
Borrower communication	n/a (NBFC owns)	as required	NBFC

CLM-2 (assignment-based) — end-to-end flow

1–5. Same as CLM-1, but in step 6:
6. Booking:
   a) NBFC books 100% of the loan on its books.
   b) Within agreed window (T+1 to T+15), NBFC ASSIGNS partner's share.
   c) Assignment instrument signed.
   d) Partner pays for its share via NEFT/RTGS.
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7. Disbursement: NBFC disburses from its own account (since 100% is booked by NBFC at this point).
   ↓
8–13. Same as CLM-1.

CLM-2 specific concerns

• TLE-MD (Transfer of Loan Exposures Master Direction) alignment — the assignment must qualify as a true sale: substantial risk and reward transferred for the assigned share.
• Timing discipline — assignment must happen in the agreed window, consistently. Drift suggests re-characterisation risk.
• Accounting — on assignment, NBFC reverses partner’s share from its own books; recognises gain / loss per accounting policy.

Customer-facing differences

• Borrower sees single experience in both CLM-1 and CLM-2.
• KFS discloses both lenders in both.
• Sanction letter discloses both.
• Single point of contact for grievance is the originator (NBFC).

Operational differences

Dimension	CLM-1	CLM-2
Real-time partner integration	Required (or rapid batch)	Less critical (T+N)
Funding requirement at origination	Both lenders’ share required immediately	NBFC funds 100% until assignment
Cash position	Lower per loan	Higher per loan (working-capital intensive)
Risk of partner pull-back mid-process	Higher (each loan)	Lower (assignment can be skipped, NBFC keeps 100%)
Reg risk	Lower (cleaner structure)	Higher (assignment hygiene)

Recommendation for first partner

CLM-1. Cleanest regulatorily, cleanest operationally if partner has decent API maturity (a bank with API banking is sufficient). CLM-2 is a fallback when partner cannot move fast at origination.

Diagrammatic summary

            CO-LENT LOAN (CLM-1, 80:20 partner:NBFC)

                    ┌───────────────────┐
                    │  Borrower         │
                    └─────────┬─────────┘
                              │ (1) Apply / KYC / Sign
                              ▼
                    ┌───────────────────┐
                    │  NBFC platform    │ ────► (4) Booking instruction
                    │  (originator,     │       (5) Daily MIS
                    │   single point    │       (6) NPA / repayment updates
                    │   of contact)     │ ◄──── Ack / queries
                    └─────┬──────┬──────┘             ▲
                          │      │                    │
                  (2) NBFC's    (3) Partner's     [Partner Bank/NBFC]
                  share funded  share funded
                          │      │
                          ▼      ▼
                    ┌───────────────────┐
                    │  CO-LENDING       │
                    │  ESCROW           │
                    │  (sponsor bank)   │
                    └─────────┬─────────┘
                              │ Combined disbursement, single UTR
                              ▼
                          [Borrower a/c]

   Repayment flow: reverse — borrower → escrow → split → both lenders' a/cs.