Lending technology · Financial services and fintech
Lending-platform income and guarantee exposure reconciled with every lending partner
A lending platform rarely lends its own money. It originates, underwrites and collects for banks and NBFCs, earns fees from them and may stand behind part of the losses. We reconcile fees with each lending partner loan by loan, record guarantee exposure as it builds and make the platform's books agree with its partners'.
In one paragraph
Lending service providers, loan-origination and collection platforms, buy-now-pay-later and embedded-credit businesses, and platforms with a lending NBFC in the group are mostly at growth stage. Unlike a payments fintech, they carry credit risk. Even without lending on their own balance sheet, they can bear losses through guarantees, first-loss arrangements and the quality of the book they originate. Founders and finance heads need that exposure in the accounts.
Chief financial officer or founder, often with the head of credit
The economics
How the money moves in this trade
Income is usually sourcing, platform and collection fees paid by the regulated lender. Under RBI's digital lending rules, the lender pays the service provider directly, and those fees cannot be charged to the borrower. Borrowers repay into the lender's own account rather than through the platform. The fee may depend on disbursement, on repayment or on portfolio performance. Each lending partner calculates and pays on its own schedule, so the platform's view of what it has earned can differ from the partner's for months.
Where the platform has agreed a default loss guarantee, it carries part of the credit risk on loans it does not own. RBI caps that guarantee as a share of the portfolio it covers. The cover must be cash, a fixed deposit with a lien or a bank guarantee in the lender's favour. As loans default, the guarantee is invoked and the cover is drawn. The platform's accounts need to recognise that exposure as it builds, not when a lender writes to say the cover has been used.
The problem
Where the numbers usually break down
Partner fees booked from the partner's statement alone
Fee income is recorded as the lender reports it, with no loan-level comparison against the platform's own disbursement and repayment data.
Guarantee exposure outside the books
Default loss guarantees are tracked by the credit team in a spreadsheet, with no liability or provision in the accounts.
Cover deposits not reconciled
Deposits and other cover placed with lenders are not reconciled to invocations and top-ups, so the remaining balance is uncertain.
Recoveries and collection fees unreconciled
Repayments go straight to the lender, but cash recovered in the field on overdue loans, and the collection fees earned on it, are never reconciled with the lender's records.
Unit economics stop at disbursement
Acquisition and underwriting cost is measured per loan disbursed, without the guarantee loss and collection cost that follow.
What we do
The work, and the result each part produces
Loan-level partner reconciliation
Disbursements, repayments and fees matched loan by loan with each lending partner every month, with differences raised.
Fee income agrees with every partner.
Guarantee exposure accounting
Guarantee obligations recorded by partner and cohort, with expected losses provided for on a stated basis and invocations tracked.
Credit exposure is in the accounts, not only in a spreadsheet.
Cover deposit ledger
Cover placed with each lender reconciled to invocations, releases and top-ups.
The remaining cover is known for every partner.
Collections and recovery reconciliation
Field cash recoveries reconciled with what each lender has credited to borrower accounts, and collection fees checked against those recoveries.
Recoveries and collection income agree with every partner.
Cohort unit economics
Revenue, acquisition, underwriting, collection cost and guarantee loss measured by disbursement cohort and partner.
Growth is judged on what a cohort earns after losses.
Group and related-party reporting
Transactions between the platform and any group NBFC recorded at both ends and reported as related-party transactions.
Intra-group lending flows are transparent.
Where we start
The first steps of an engagement
Partner statements and loan data
We ask for each lending partner's fee and loan statements, the platform's disbursement and repayment data, the guarantee agreements and the cover deposit records.
Loan-level partner reconciliation
Disbursements, repayments and fees are matched loan by loan with each partner. Differences are reduced to a list of specific loans.
Guarantee exposure on the books
Default loss guarantee obligations are recorded by partner and cohort, and cover deposits are reconciled to invocations and top-ups.
Partner and guarantee position
The first report shows fee income agreed with each partner, guarantee exposure and provision by cohort, and the cover remaining with each lender.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Fee income agreed with each lending partner
- Guarantee exposure and provision, by partner and cohort
- Cover deposits reconciled to invocations
- Recoveries and collection fees agreed with each lender
- Contribution per cohort after guarantee loss
- Related-party balances agreed at both ends
Who it suits
Written for, and not the right fit for
- You need a lending licence, RBI registration or regulatory advice; that stays with your company and its legal and regulatory advisers.
- You need the platform's statutory audit or a certificate a lending partner asks for signed; an independently engaged CA does that.
- Lending service providers originating and collecting for banks and NBFCs.
- Platforms that provide default loss guarantees to lending partners.
- Groups with both a technology platform and a lending NBFC.
Services
Services this work draws on
Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Internal controls and risk
Controls sized to your business, documented and actually tested.
Explore service ↗Fractional CFO services
Senior financial leadership on the days you need it, not a full-time hire.
Explore service ↗Banking, funding and due diligence
Information a lender or investor can verify without a reconstruction.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
Why do our fee figures differ from the lender's?
Usually because of timing, loans one side treats as cancelled, and fee rules applied differently. A loan-level match each month shows which it is, and turns a disputed total into a short list of specific loans.
How should a default loss guarantee appear in our accounts?
As an obligation that grows with the portfolio it covers, with an estimate of expected losses based on actual cohort performance. The exact treatment depends on your accounting framework and your auditor will review it. We help you set the basis and keep the data.
Do you advise on RBI digital lending compliance?
No. Regulatory interpretation and compliance are for your company and its advisers. We make sure your financial records — fees, guarantees, recoveries — are accurate and support whatever your compliance team needs to report.
5th Quadrant is not a lender, lending service provider or RBI-regulated entity, and does not give regulatory advice. Registrations, regulatory reporting and compliance with the Reserve Bank of India's directions are the responsibility of the company or its lending partners; 5th Quadrant prepares accounting data, reconciliations and supporting records only. Statutory audits and any prescribed certification are signed by an independently engaged licensed professional. Full detail is on our Professional Scope page.
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