Co-lending, of late, has become a popular proposition for banks and non-banking finance companies (NBFCs). Under this, banks partner with NBFCs to reach out to borrowers and thus meet the minimum lending regulatory requirements in the sensitive priority sector lending (PSL) areas. It helps NBFCs to grow their scale as the entity gets access to banks' lower cost of funds, grow their loan book, and earn a fee for sourcing and maintaining the loan through its lifecycle simultaneously. Co-lending agreements are formed in the areas of agricultural loans, MSME loans and vehicle loans as they are the key segments of PSL loans.