Newtap Finance Private Limited (previously known as Parfait Finance & Investments Private Limited)

1. Background

The Co-Lending Policy of Newtap Finance Private Limited (“Newtap” and / or “the Company”) has been formulated in line with the Reserve Bank of India (Co-Lending Arrangements) Directions, 2025 dated August 06, 2025, which are applicable to Co-Lending Arrangements (CLAs) entered into by Commercial Banks (excluding Small Finance Banks, Local Area Banks, and Regional Rural Banks);All-India Financial Institutions; and Non-Banking Financial Companies (including Housing Finance Companies).

 Further, while digital lending activities are primarily governed by the Reserve Bank of India (Digital Lending) Directions, 2025, any digital co-lending arrangement undertaken by the Company shall also adhere to the specific provisions of the Co-Lending Directions, without derogation to the Digital Lending framework. Accordingly, this policy sets out the framework

 for establishing, operating, and managing co-lending partnerships in a manner that ensures full regulatory compliance, transparency, and sound risk governance

2. Objective

 The Company proposes to engage in co-lending partnerships with regulated entities, including Banks and Non-Banking Financial Company (NBFC) registered with Reserve Bank of India (RBI) — to explore co-lending opportunities across its existing and new product segments. This Co-Lending Policy has been formulated in line with the guidelines laid down by the Reserve Bank of India, with the objective of creating a structured framework for such Partnerships. The policy aims to leverage the combined strengths of the Company and its co-lenders to enhance credit flow, ensure transparency, and maintain full regulatory compliance, including adherence to the RBI (Digital Lending) Directions, 2025 wherever applicable. This Policy shall apply to all existing and future products of the Company

3. Engagement Model with Co-lender

 All co-lending arrangements (CLAs) entered into by the Company shall be in accordance with the model prescribed by the Reserve Bank of India. A CLA is defined as an arrangement, formalised through an ex-ante agreement, between the Company (as an 'Originating Regulated Entity (Originating RE') and a partner Regulated Entity (“Partner RE” and/or Co-lender) to jointly fund a portfolio of loans comprising of either secured or unsecured loans, in a pre-agreed proportion, involving revenue and risk sharing. Further any digital lending activity undertaken under a co-lending structure shall also be governed by the relevant provisions of these Directions, in addition to the RBI (Digital Lending) Directions, 2025.

4. Criteria for Selection of Partner

1. The Partner RE should be a Bank or a NBFC registered with RBI; 
2. Number of years in active operations : minimum 2 years; 
3. Credit Rating of the NBFC should be BBB and above. The rating should be obtained from an RBI approved Credit Rating Agency & the rating should not be more than one year old as on the date of agreement; 
4. The Partner RE should have a minimum Asset Under Management of Rs.100.00 crores; and 
5. The Partner RE should have a presence in more than one state in India

5. Execution of Master Agreement

 A master agreement shall be executed with each Partner RE. This agreement shall be formalised before the origination of any loans under the CLA and must, at a minimum, include:

• Detailed terms and conditions of the arrangement. 
• The criteria for the selection of borrowers.
•  The specific product lines and areas of operation. 
• Provisions related to the segregation of responsibilities, including sourcing, underwriting, servicing, monitoring, and recovery. 
• A defined time-frame for exchanging critical information between the partners. 
• Provisions related to customer interface, customer protection, and the grievance redressal mechanism.
• The manner of appropriation of repayments between the Company and the Partner RE.
• Any fees payable for lending services, which must be based on objective criteria.

All transactions (disbursements and repayments) between the REs and with the borrower shall be routed through an escrow account maintained with a bank.

 6. Commercials

1.  Risk Sharing - The Company and the partner RE shall jointly fund loans in a pre-agreed proportion. As per RBI guidelines, each RE under the CLA must retain a minimum 10 per cent share of the individual loans in its books. 
2. Interest, Fees and Charges from borrower - The interest rate and any other fees / charges on the underlying loans charged to the borrower shall be based on the CLA, subject to the regulatory norms applicable to the Company and the Partner REs. Specifically, the final interest rate charged to the borrower shall be the blended interest rate which is calculated as an average rate of interest derived from the interest rates charged by Company and the Partner RE, as per their internal lending policies and risk profile of the same or similar borrower, weighted by the proportionate funding share of the Company and Partner RE under the CLA. 
   Any change in this rate shall be communicated to the borrower. All other fees and charges payable by the borrower in addition to the interest rate shall be incorporated into the Annual Percentage Rate (APR) and disclosed in the Key Facts Statement (KFS).
3. Any other commercial terms – Shall be mutually agreed with each Co-Lender.

7. Charge Creation on security

 In case of secured assets, the Company and the relevant Co-Lender shall establish a framework for creation of security and charge, as mutually agreed. 

8. Customer Support 

a. The Company shall be the single point of interface for the customers. The Company shall enter into a loan agreement with each borrower, which shall contain the features of the arrangement and the roles and responsibilities of the Company and the Partner RE, in the manner agreed between the Company and the Partner RE . The details of the arrangement shall be disclosed to the customers upfront and their explicit consent shall be taken.

 b. The Company and each Partner RE shall be responsible severally to comply with the extant regulatory guidelines relating to lending, digital lending, customer service, KYC, outsourcing, fair practices code or any other relevant guidelines applicable to the co-lending arrangement.

 c. The Company shall ensure that it is able to generate a single unified statement for each borrower, through appropriate information sharing arrangements with each Co-Lender. 

d. The Company shall be primarily responsible for providing the required customer service and grievance redressal to the borrower. Suitable arrangements will be put in place by the Company and each Co-Lender to resolve any complaint registered by a borrower within 30 days.

9. Operational Arrangements, Monitoring & Recovery

 The CLA shall represent an irrevocable commitment by the Partner RE to take its share of the loan into its books on a back-to-back basis.

 The Company shall ensure that the partner RE's share is reflected in their books no later than 15 calendar days from the date of disbursement. The Company shall also ensure that it transfers the loan under CLA only to the partner RE, as per the ex-ante agreement and as specified in the KFS at the time of sanction of loan. If this transfer is not completed, the loan shall remain fully on Company's books and can only be transferred later under the MD-TLE, 2021.

 The Company and each Co-Lender shall establish a framework for monitoring and recovery of the loans, regulatory reporting, fraud identification and reporting, as mutually agreed 

10. Audit & Verification of the Loans 

The loans co-lent or assigned under this Policy shall be included in the scope of internal/ statutory audit within each Co-Lender to ensure adherence with their respective internal guidelines and extant regulatory requirements. 

11. Asset Classification and Provisioning 

The Company and each of the Partner RE shall apply a borrower-level asset classification for their respective exposures to a borrower under CLA, implying that if either of the company or a Co-lender classifies its exposure to a borrower under CLA as SMA / NPA on account of default in the CLA exposure, the same classification shall be applicable to the exposure of the other party to the borrower under CLA. The Company shall put in place a robust mechanism for sharing relevant information in this regard on a near-real time basis, and in any case latest by the end of the next working day

12. Regulatory Reporting

 Both lenders shall take care of their respective reporting requirements including reporting to RBI, CKYCR, Credit Information Companies (for their share of the loan account) or any other requirement, under the applicable regulations for its share of the loan account. 

13. Transfer of Loan Exposures

Any subsequent transfer of loan exposures originated under this CLA to a third party, or any inter-se transfer between Company and the Partner RE, shall be in strict compliance with the RBI's Master Directions - Transfer of Loan Exposure (MD-TLE), 2021. Any transfer to a third party requires the mutual consent of both Newtap and the partner RE.

14. Disclosures by Newtap Finance

 The Company shall make the following disclosures: 

1. On Website: A list of all active CLA partners shall be prominently disclosed on the company website.
2.  In Financial Statements: Appropriate disclosures shall be made in the 'Notes to Accounts' in the financial statements (quarterly/annually as applicable). This will include, on an aggregate basis, the quantum of CLAs, weighted average interest rate, fees, sectors, performance, and DLG details, if any.

15. Business Continuity Plan

 Both the Company and the Partner RE shall implement a business continuity plan to ensure uninterrupted service to their borrowers till repayment of the loans under the CLA in the event of termination of co-lending arrangement between the co-lenders.

 16. Review of the Co-lending Policy 

The policy shall be reviewed annually or when there is change in co-lending regulatory guidelines or newtap’s co-lending product construct for scope and content so that it remains aligned to the changes in the regulatory requirements, business conditions and Newtap Finance’‘s own business strategy and risk appetite.