NBFC Collaboration

Begin Your NBFC Collaboration Process Today

The model of the NBFC partnership is the newest entrant in the scope of the NBFC industry to further the economic benefits of parallel banking. Legalraasta assist with deep topic knowledge and broader viability in developing the NBFC collaboration
What we offer :

  • Easy contact between NBFCs and players on Fintech
  • Well-established models of partnership and ready to live
  • Draft agreements and support for aligned Documentation
  • Account opening of Escrow
  • Loan Production of software and digital marketing
  • Framing and Reporting of the FLDG structure
  • Accounts Retaliation and monthly Partnership Market reconciliation
  • Dedicated support for accounting and CA

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Apply Now!

NBFC Collaboration in India

INBFCs are offering a big contribution to reinforcing the expansion of the economy. At an equivalent time, FinTechs are improving the experience of banking by making it more personalized and intuitive. A growing number of NBFC license holders are collaborating. That collaboration is with all the FinTechs to strengthen the workflow of their Company and expand the customer base.

About 8900 companies are holding a legitimate certificate of NBFC registration out of which only around 950 are running their business activities and features a capital size of quite 40 crores. The remainder of the NBFCs are mere license holders and are only ready to meet the regulatory cap of two crore rupees. All the NBFC license holders are actively working with FinTechs through the use of cutting-edge technology to develop creative loan products, deliver quick loan disbursement, and many other user-friendly benefits.

Reasons for Collaboration among Bank & NBFC

As taking all the requirements to give credit into account, along with assuring the economic assistance and growth of the economy into account, the request for collaborations between an NBFC and a bank is something that needs everyone’s attention.

The key reasons behind this teamwork are:

Dynamics of NBFC Collaboration

NBFCs and banks continue to strive to meet the financial needs of individuals and businesses. But with rising financial costs, NBFCs are more focused on providing customized products to meet specific needs. Unlike banks, which are also under the authority of the RBI, there are differences that set the NBFC apart from the banks and are listed below:

Therefore, NBFCs must make continuous efforts to protect their domain and build a solid customer base. The various types of loans in which new NBFCs are involved include early loans, student loans, medical loans, travel loans, etc. therefore it requires significant investment in technology and the process of creating a loan.

The NBFC partnership is an emerging concept in India where NBFC licensees are working with Fintech transformation companies. It is done to gain leadership and facilitate funding. An agreement has been prepared that emphasizes basic conditions such as the revenue sharing model between the two parties. It also outlines the value of the NPA and its risks between the two parties involved.

Large NBFCs in size also face financial cracks allegedly controlled by the RBI but the medium size and small size NBFC are different as they were able to attract a good FDI amount that enables them to pursue lending by selling the base smoothly. The increasing use of Mobiles and smartphone logistics has encouraged NBFCs to connect with low-income customers, using their smartphones through a loan initiation process, e-KYC, and e-signature payments. Workflow has been postponed, production increased, accuracy, and cost savings are maintained through the use of Robotic Automation. NBFCs also bring the implementation of various new technologies. That technologies are e-KYC, data exchange, loan repayment, and cybersecurity collection and security. The programming interface (APIs) were introduced and used for better communication between all participants.

FinTechs is making rapid efforts in the field of acing technology making all operations of Banks and NBFCs easier. Although NBFCs are trying to make their system automated, their pace is slowing down due to their unpopular and traditional methods. So, fintech players are helpful. A standard disclosure of 20% of NBFC loans is seen in the event that NBFC’s interaction with interest rates is determined by which Fintech or banking company sponsors the remaining loan. New borrowing products and technically sound loans are underpinning the foundation of a successful NBFC Collaboration.

NBFC Collaboration Business Model and its Working Flow

Fintech Company is a sponsor of the FLDG & Fund. The fund is collected by the Fund Manager and deposited with the NBFC. Sales Loans are made by NBFC and the budget is determined by Fintech Company.

Company 1 (Fintech Company)

The online and offline marketing campaign is still being promoted by Fintech Company with leads. The Fund Manager is provided with a sufficient number of deposits and is empowered by Fintech Company. These funds are funded by the Fund Manager at NBFC which forms Inter Corporate Deposits.

Company 2 (Fund Manager)

The Fund is managed by a competent person with good legal and financial knowledge and who is a CA or a lawyer; basically, the instructions received from Fintech Company. Fees are paid by Fintech Company for assistance from CA or Attorney.

Company 3 (NBFC)

Tasks such as loan repayments and transcripts are performed by the RB-controlled NBFC. A list of lenders for various loan products was provided by Fintech Company and the risk assessment base, the price is released by the NBFC. The rest of the revenue is retained by the NBFC because the risk assessment services and loan control services are made by it and the remaining profits go to Fintech Company which is decided upon.

Benefits of NBFC Collaboration

The advantages that NBFCs gains by the partnership with Fintech Companies are as follows :

Aggregate Productivity

Fintech has streamlined the NBFC’s internal and external roles. It also helps to ensure the smooth running of non-banking financial companies. It also encourages NBFCs to revise their back-office-related practices, resulting in productivity growth.

Special and new product offerings launched

The Non-Banking Financial Companies are making revolutionary improvements to their new products through the assistance of Fintech’s latest technology-based instruments. The partnership between NBFCs and Fintech Players helps to launch special and on-trend products such as Payday Loans, POS Financing, Durable Consumer Loans, Invoice Financing, etc.

Using Digital Modes-Less and Modernized Paper

NBFCs become acquainted with the exceptional techniques after coming together on board along with a Fintech Company. Instead of the conventional, obsolete manual method, it dragoons NBFC into selecting the paper-less digital modes. Several importantly, digital onboarding and confirmation save the costs incurred on operations.

NBFCs look with an eye of fire at Fintech companies, and it is a reality that Fintech companies are the next big thing, and therefore it will offer surprising and exceptional results to partner with them. To increase their lending capacities, NBFC’s are walking out of the jungle. Not only would NBFCs benefit from this alliance, but after joining hands with NBFCs, Fintech companies will also be dominating newcomers in the industry. In short, for both of them, we can assume it’s going to be a win-win scenario.

Steps to do NBFC Collaboration online

Step 1 : Sign the co-origination agreement

Sign the co-origination agreement between the two parties (NBFC and Fintech Company). An Indian Entity affiliated with the FinTech business model must be registered to begin the process of partnership between FinTech and NBFC. Signing the co-origination scheme agreement is mandatory for both the NBFC Business and the Fintech Company.

Step 2: Sign the Inter-Corporate Deposit Agreement with a Fund Manager

Until entering into the Partnership Agreement, both the FinTech Business and the NBFC will undergo consultations and negotiations. Fintech Company would enable the Fund Manager to sign (inter-corporate deposit agreements)

Step 3: Sign a platform service agreement

The NBFC incorporated in the collaboration is needed to sign a platform service agreement. That too for the repayment of technology services provided by the FinTech Company. NBFC is to open a separate Bank Account for lending purposes.

Step 4: Open Escrow Account

The NBFC steps forward and maintains an Escrow Account (a separate disbursement Escrow Account coupled with the intent of repayment). Open an ESCROW account for refund and repayment purposes.

Step 5 : Employ a Chartered Accountant for proper fund management

After opening an Escrow Bank Account, a very experienced expert shall be selected for the management of funds and operations of Bank Account. Appoint a highly trained and professional Chartered Accountant for the management and handling of Escrow Bank Account funds and services.

Step 6 : Compliances like GST, TDS, CKYC, Credit Reporting

After the start of business, the Fintech Companies must completely see and make sure on regular compliance (CKYC, TDS, GST, Credit Reporting, and others).

Step 7 :Reconciliation with CIC Reporting

Monthly reconciliation and the monitoring of the CIC Reporting. A mandatory point to remember for NBFCs meeting NPA provisioning requirements of 45-90 days.

Documents Required for NBFC Collaboration

Fintech Company and its Compliance Terms

You can contact us if you have any questions or concerns relating to the NBFC Partnership Model or if you are waiting for the right opportunity to collaborate with the NBFC. We would feel happy to extend help to you if you need some clarification from our end. Also, at the earliest, we will give you sufficient materials. We, at Legalraasta, will do whatever we can to please you all the way.

NBFC Looks at the Balance sheet of Such Fintech or First Loss Default Guarantee

NBFC should search for the background of Fintech companies also its financial strength and its promoters profile, especially just in the case of a Foreign Fintech company, Necessary due diligence must be held before signature on NBFC collaboration Agreements. Necessary compliance must be followed by fin-tech companies.

Lead-Based Model

In this Model, Fintech company source leads and supply advanced tech-driven underwriting and risk assessment software. NBFC usually pays a commission to Fintech within the range of 1% to three of the Loan Amount.

Co-Lending Model

in this model, Fintech company provides the required information and decision-making tools for quick loan processing by the NBFC. Fintech Companies are performing on the FLDG model Via a fanatical Escrow Account. FLDG Maybe Up to 70% and therefore the Remaining 30% Loan book financed by the NBFC from it’s fund. Fintech company shares about 24- 36% ROI with NBFC. Also, Fintech company covers 100% NPA & Expense.

First Loan Default Guarantee

The First Loan Default Guarantee (FLDG) is that the means to guard the lender’s interest in NBFC. Lenders invite collaterals so as to safeguard their advances made through Fintech Company.

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Frequently Asked Questions

NBFC Collaboration is an exercise in which the financing and procurement of leads include active collaboration between NBFC and Fintech companies/banks.

NBFC Collaboration can be made easily online. But you will require an expert to process your application. Take consultation by giving a call on 8750008881. Even you can visit the website Legalraasta.

NBFC Collaboration License cost usually starts from Rs.9,000 and goes high according to the service you choose. For extra major details visit our website Legalraasta or you can call us on 8750008881.

The most important documents required are phone number, mail id, and address proof of the applicant. Moreover, mention the for more details call us on 8750008881.

Legalraasta will give end to end help when it comes to NBFC Collaboration procedure, and it will solve all the queries related to this process in no time.

If the FinTech Business has received international debt/loan assets, it should comply with the External Commercial Borrowings Guidelines (ECB).

In order to collect funds and source leads, the key reason behind NBFC collaboration.

To satisfy the loan requirements, the NBFC opens a new bank account.

At the initial stage of the NBFC Partnership Business Model, the Fintech Firm offers FLDG and funds.

Loan Management System, Origination System, Collection System, Credit and Underwriting Software, IT Security, Income Check Mechanism, Job Profile Online Verification, and Privacy Laws are the technologies needed.


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