LSP or NBFC: who lends on record?
Behind most Indian digital lending sits one of two structures. Knowing which one you are — and keeping its rules visible in your operations — is the difference between a clean audit and an awkward one.
The two structures
Own-book NBFC: you hold an RBI registration, lend your own capital, carry the credit risk and appear as the lender on every document. Your obligations run the full span — disclosure, fair practices, grievance, reporting.
LSP (Lending Service Provider): you run customer acquisition, journeys and servicing, but a partner NBFC is the lender of record. The partner’s capital is at risk, the partner’s name leads the paperwork, and your relationship with them is an outsourcing arrangement they remain accountable for.
Lender of record: why the name on the paper matters
The lender of record is the regulated entity legally making the loan. Its legal name, CIN and registered office belong on the KFS, sanction letter and agreement; its identity should be the remitter on disbursal files; its grievance escalation should be the one the borrower sees.
The classic LSP failure is brand bleed: the LSP’s brand is so prominent that documents, or worse payouts, start carrying the wrong identity. In review, that stops being a branding question and becomes a structural one.
Flow of funds: the bright line
In an LSP structure, borrower money should move between the borrower and the lender’s accounts — disbursals out of lender-side accounts, repayments into them. Funds routing through the LSP’s own accounts is the pattern regulators have pushed hardest against, because it blurs who actually holds the credit relationship.
Operationally this means settlement accounts are configured lender-side on every rail — payment gateway, eNACH, payouts — and attested, so the discipline is provable, not just intended.
The outsourcing agreement
Partner NBFCs are accountable for what their LSPs do, so a serious partnership runs on a written outsourcing arrangement: scope of services, data handling, audit access, controls the LSP must maintain. Expect a diligent partner to ask for evidence — audit trails, access controls, maker-checker on money — not just clauses.
How Loano handles it
Both structures are first-class. Each entity on the platform carries its lender-of-record identity, which flows to documents, payout files and borrower surfaces automatically. Settlement-account attestation keeps the flow of funds lender-side in LSP setups, and the in-app client agreement includes the LSP variant with the partner NBFC’s outsourcing schedule. The audit trail gives partners the oversight their accountability demands.
Structure choice itself is a legal and commercial decision — take it with counsel. What the platform ensures is that whichever structure you run, the operations match it.
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