Let’s face it—borrowing money isn’t just about filling out some forms and waiting for cash to land in your account. It’s about opening doors. Maybe you want to redo your kitchen, kickstart a new business, or invest for the long haul, but you keep running into the same old wall: not enough credit. That’s where co-lending steps up. It’s a team effort between banks and non-banking financial companies (NBFCs), and it’s making loans faster, easier, and more tailored than ever.
Co-lending is changing the way lending works in India. It’s good news for everyone involved. Borrowers get access to money when they need it, and lenders—thanks to better tech and smarter risk-sharing—can reach more people without sacrificing safety or profits.
So, what’s co-lending, exactly?
Think of it as partnership lending. Banks and NBFCs join forces to fund loans together. Usually, the NBFC finds and works with customers, and the bank puts up most of the money, often at better interest rates. Both sides share the risk and the work.
For you, this means more ways to get a loan, better terms, and offers that actually fit your needs. For the banks and NBFCs, it’s a safer way to lend and a smarter way to do business.
How Generative AI is Shaking Up Loan Underwriting
Here’s where things get really interesting. Generative AI—those smart machine learning models everyone’s talking about—are now making loan decisions faster and more accurate. In India, banks and NBFCs are jumping on board. AI looks at all kinds of data: your credit score, income, payment history, even bigger trends in the market. It predicts how likely you are to pay back the loan, suggests rates just for you, and spots red flags early. Suddenly, what used to take weeks now takes days, if not hours.
Why Borrowers and Lenders Both Win
Borrowers first. AI-powered co-lending means you can get approved for a loan way faster, sometimes in just a day or two. If you need money for a house, a business, or a last-minute tax-saving investment, you’re not stuck waiting. AI also tailors offers to your actual financial situation, so you’re more likely to get a good rate, and since the risk is shared, you might qualify for a bigger loan than before.
Now for the lenders. Banks and NBFCs get smarter risk analysis and fewer mistakes—AI doesn’t get tired or overlook details. Co-lending lets them spread out risk, so they can help more people, even those who might have been turned down before. Plus, they save money and time by splitting up the work and using each other’s strengths—banks get access to more customers, NBFCs get cheaper funds to lend.
Traditional vs AI-Based Underwriting: What’s the Difference?
Traditional underwriting can drag on for days or weeks, with lots of paperwork and limited info. AI-based underwriting? It’s quick—think hours or a couple of days—and uses tons of data for smarter, more personal decisions. Less human error, more people approved, and costs drop thanks to automation. No wonder AI is becoming the go-to for co-lending.
Tax Rules: What Should You Know?
Taxes matter, and loans are no exception. Co-lending doesn’t change the tax laws, but it can affect how you plan your repayments.
- Home loans: The interest you pay can be deducted under Section 24(b) of the Income Tax Act. The principal part? That’s covered under Section 80C.
- Business loans: You can deduct the interest as a business expense. This plays into your overall risk and investment game plan.
- Personal loans: Usually, the interest isn’t tax-deductible, but these loans can help when you’re in a pinch.
- Tax-saving investment loans: Some loans are designed to help with tax-saving and boost your investment portfolio, all while keeping your cash flow flexible.