7.4 Settlement and reconciliation

Daily settlement flow

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   1. Day rolls. NBFC's collection escrow now holds yesterday's repayments.
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   2. Settlement engine runs (typically T+0 batch around 06:00).
      For each partner:
        a) Sum all repayment events with share breakdown.
        b) Sum any settlement-affecting adjustments (waiver, settlement, DLG draw).
        c) Compute net amount due to partner.
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   3. Generate sponsor-bank instruction file:
        For each partner, an NEFT / RTGS instruction from escrow → partner a/c.
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   4. Submit file to sponsor bank.
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   5. Bank processes; UTRs returned (usually within hours).
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   6. Settlement records stored with UTR.
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   7. Notify partner: settlement completed for date X, amount Y, UTR Z.
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   8. Partner reconciles on their side.

Reconciliation layers

Three reconciliations to keep clean:

Layer A: Sponsor bank → NBFC ledger

• Sponsor bank statement vs NBFC’s expected (collections, payouts, transfers).
• Daily; auto-match by reference + amount + date.
• Exceptions queued for ops.

Layer B: Escrow → partner ledger

• For each partner, the escrow’s partner-share balance vs partner-attributable repayments.
• Daily.

Layer C: NBFC ledger → partner ledger

• Borrower-level data NBFC reports to partner vs partner’s own records.
• Periodic (weekly / monthly per agreement); slower than A and B.
• The most common source of disputes.

Per-partner P&L (for own books)

For each partner relationship, NBFC maintains its own P&L view (in addition to consolidated):

Line	Component
Origination fee earned (share or 100%)	from disbursals
Servicing fee earned	from outstanding partner-share
Late / penal fees retained	per waterfall
Cost-of-funds saved	on partner share
Operating cost allocated	based on activity
Credit cost (own share)	per IRACP
DLG cost (if provided)	premium accrued + invocations
Tech / vendor cost allocated	per loan / per disbursement

This view drives partner-relationship economics decisions — which partners are profitable, which are loss-making, where to renegotiate.

Reconciliation engine

   Inputs:
     - Daily sponsor-bank statement (CSV / API)
     - NBFC's loan-event ledger
     - Partner-share allocations
     - Co-lending escrow balance

   Processing:
     - Match each sponsor-bank transaction to a NBFC-side expected entry by:
       - Reference / virtual-account
       - Amount
       - Date
       - Counterparty
     - Bucket into MATCHED / MISMATCH / EXTRA / MISSING.

   Outputs:
     - Reconciliation report per account per date.
     - Exception queue for MISMATCH / EXTRA / MISSING.
     - Settlement-ready records (MATCHED).

Exception handling

Exception type	Action
MISMATCH (amount differs)	Ops reviews; possibly partial allocation; flag
EXTRA (bank shows credit, no expected)	Possibly borrower’s bonus payment; allocate to oldest open loan; or hold
MISSING (expected but no bank entry)	NACH bounce check; re-presentation; if still missing, escalate
DUPLICATE (bank shows two of same)	One real one chargeback / reversed; reconcile across days

Stress events

• Sponsor bank batch failure — daily file rejected → submit again; ops escalation if not resolved by cut-off.
• Bank holiday — settlement skipped; T+2 settlement file aggregates two days.
• Partner dispute — partner challenges a settlement number → investigation; pull the borrower-level evidence; resolve.
• DLG invocation mid-period — DLG draw reflected in settlement; document carefully.

Settlement audit

For audit, the platform must produce:

• For any date: the full settlement worksheet — every repayment, every share computation, every adjustment, the final settlement number, and the bank instruction.
• For any partner: a year-to-date settlement ledger with running balance.
• For any disputed item: the transaction-level evidence (borrower, loan, repayment receipt, allocation).

All evidence stored immutably in object store; queryable on demand.