Staff working toward the same goal are referred to as collaborating. Despite the fact that India has over 9000 active NBFC registration, only 954 of them have book sizes of more than 40 crores. The remaining 8046+ NBFCs can only meet the INR 20 million regulatory loan book cap. NBFC Collaboration is a new business term referring to NBFC registration license holders developing relationships with banks or Fintech businesses to obtain leads and funding. Both parties may or may not share revenue, and both may or may not face NPA risk. Traditional large NBFCs have experienced liquidity challenges in 2019 as a result of stringent RBI oversight, while mid-size and small NBFCs have performed successfully and have been able to attract considerable FDI for retail lending. NBFCs with exposure to at least 20% of loan books must finance the remaining loan book amount with the Bank or Fintech Company at the agreed-upon interest rate under NBFC Collaborations. NBFC partnership is fairly effective if there are new loan products and quick loan disbursement employing the latest technology. As a consequence of the Reserve Bank of India's stringent governance criteria, massive NBFCs struggled with the financial downturn in 2019. Medium- and small-scale NBFCs, on the other hand, have had a difficult time, albeit they have made progress and are now able to attract significant FDI for retail lending. They are undeniably becoming commercially successful. The collaboration of big-scale NBFCs with Fintech businesses and banks is bringing all of the companies involved in these processes to their happiest days yet. Furthermore, the NBFC partnership will contribute to the invention of novel methods of gaining clients, as well as the accomplishment of the primary aim, which is to raise cash. NBFC collaboration does have its own set of complexities. Let's Talk About It! NBFCs and banks are always seeking to meet the financial needs of the populace and businesses. However, as the cost of money grows, NBFCs are focusing more on developing customised solutions to meet the needs of individuals. Unlike banks, which are likewise regulated by the RBI, NBFCs and banks have some distinctions, which are listed below: Non-bank financial firms do not take demand deposits (NBFIs). Checks cannot be issued by NBFCs. If you want to ensure your deposits, NBFCs are not the place to go because they do not provide deposit insurance. As a result, NBFCs must work constantly to secure their domain and establish a loyal client base. Among the different sorts of loans in which new-age NBFCs are involved are advance salary loans, student loans, medical loans, travel loans, and other forms of loans. Big data and blockchain technologies are proving to be important stepping stones in alternative lending methods, demanding large investments in technology and the loan origination process. In India, NBFC Collaboration is a novel concept in which NBFC registration permit holders collaborate with emerging Fintech firms. It is done to generate leads and facilitate funding. The agreement is being drafted, and it contains the essential elements, such as the two parties' revenue distribution plan. It also displays the proportion of NPA and the risk it provides to both parties. Large NBFCs are also suffering liquidity challenges, which may be attributed to RBI rules; however, the scenario for mid-sized and small NBFCs is different since they can attract considerable sums of FDI, allowing them to pursue retail lending with ease. Because of the rising usage of mobile phones and smartphone penetration, NBFCs are reaching out to lower-income clientele by leveraging their cell phones for loan origination, e-KYC, and disbursement e-signature. Operational procedures have been simplified, productivity has risen, accuracy has increased, and cost savings have been preserved by utilising Robotic Automation. NBFCs are also using cutting-edge technology like as e-KYC, data interchange, loan disbursement and collection, and cyber security. APIs (application programming interfaces) are being developed and utilised to improve connection among all stakeholders. FinTechs are rapidly growing in the field of acing technology, making the entire tasks of banks and NBFCs easier. Even if NBFCs attempt to build their own automated system, their development is hampered by their lethargic approach and dependence on outdated methodologies. As a result, businesses in the fintech industry step in to assist. The typical exposure of 20% of the NBFC's loan books is apparent in the case of NBFC Collaboration, and the interest rate is decided by which Fintech firm or bank funds the remaining loan book. The creation of unique loan products, as well as effective loan disbursement via the use of technology, is the cornerstone of successful NBFC collaboration.