Digital lenders are set to lobby with the Reserve Bank of India to extend the first loss default guarantee cover of 5% to co-lending arrangements as well.
Fintech companies say that such an extension will allow more skin in the game and give banks the confidence to enter into more such tie ups.
The RBI recently allowed digital lenders to take first loss default guarantee (FLDG) on loans while capping the guarantee cover to not more than 5% of the total loan portfolio. All entities regulated by the central bank will have to ensure invocation of default guarantees within 120 days of a loan falling overdue.
Source:
Economic Times
