FLDGFirst Loss Default Guarantee
FLDG is an arrangement where a lending service provider or platform partner covers a lender's initial losses on a loan portfolio up to an agreed percentage, sharing credit risk without holding the loan.
The RBI has placed conditions on default loss guarantee arrangements in digital lending, including caps and disclosure requirements, after concerns that they obscure where credit risk actually sits.
Lenders using such arrangements need the underwriting and audit trail to stand on its own, independent of the guarantee.
Full guide: FLDG partnership model