By Jincy Ansa Rose | CORD
In an era where loan disbursals are completed in seconds, prolonged and fragmented recovery mechanisms are no longer tenable. As of March 2023, NBFCs account for 23% of India’s total credit, playing a critical role in last-mile credit delivery. With models spanning digital lending apps, BNPL, co-lending, and embedded finance, the sector has achieved significant scale. However, that scale has brought with it a familiar challenge: fragmentation of enforcement and accountability in recovery. While most NBFCs have streamlined origination and underwriting processes, the same cannot be said for the enforcement of repayment.
When defaults occur, particularly in ecosystems involving multiple partners, initiating and tracking recovery becomes operationally taxing.
The Gap: Arbitration Clauses Without Execution Frameworks
Many NBFC agreements include arbitration clauses, in alignment with regulatory expectations. However, these clauses often exist in isolation, without a functional framework to trigger arbitration or manage its progression. The result is a patchwork of manual interventions, legal uncertainty, and inconsistent enforcement outcomes. For NBFCs operating at scale, this leads to delays in recovery, increased operational overhead, and exposure to compliance risk.
A Structured Solution: API-Enabled Arbitration, Backed by Expert Case Management
At CORD, to address the systemic fragmentation in recovery, we are developing an API-driven arbitration infrastructure specifically designed for NBFCs. This architecture balances automation with human oversight, ensuring efficiency without compromising on clarity, responsiveness, or procedural integrity.
Our solution rests on the following strategic pillars:
Seamless Escalation:
Disputes arising from defaults or contractual breaches can be automatically routed to CORD through secure APIs, triggering arbitration without requiring manual initiation by legal teams. Each case is assigned a dedicated CORD Case Manager, who ensures timely onboarding, jurisdiction checks, and procedural clarity from day one.
Real-Time Visibility with Human Oversight:
While the platform enables NBFCs and their partners to track proceedings, monitor deadlines, and receive status updates within existing dashboards, our Case Managers act as central points of coordination, bridging operational silos, clarifying next steps, and ensuring the process remains aligned with timelines and regulatory expectations.
Compliance by Design, Execution with Empathy:
The infrastructure is built in accordance with RBI and industry guidelines, but its delivery is human-led. From managing party communications to supporting arbitrators and tracking procedural orders, our Case Managers bring consistency, accountability, and a clear escalation path to every matter, particularly vital in high-volume or partner-led lending environments.
Multi-ODR/ADR Arbitration Clause
We support the inclusion of a multi-ODR/ADR clause in lending agreements, allowing NBFCs to pre-select CORD or similar institutions for arbitration, mediation, or conciliation, depending on the nature and complexity of the dispute. This enables lenders to adapt their resolution approach across portfolios, jurisdictions, or counterparties, depending on the claim value and the factors in consideration. The proposed multi-ODR/ADR clause would ensure compliance with the Arbitration and Conciliation Act provisions.
By embedding enforceability into the credit pipeline, NBFCs gain faster turnaround on contested recoveries, reduced dependency on fragmented legal teams, along with greater confidence in partner compliance and borrower communication. A measurable impact on recovery efficiency and cost of credit is obtained through this system. As India’s credit ecosystem becomes increasingly digital, the supporting enforcement infrastructure must evolve in parallel. Arbitration, when systemically embedded and operationalised, offers a legally sound and digitally scalable solution for NBFCs seeking to bring predictability and consistency into recovery.
Bringing Resolution Closer to the Ground
In this quarter, CORD partnered with leading NBFCs to conduct a focused resolution drive, addressing over 80 lending-related disputes in just two days. This was not a mass disposal exercise. It was an intentionally designed outreach effort to deliver fair, inclusive, and enforceable resolution at scale.
While scalable recovery systems are critical, their true value is tested not in metros but in India’s Tier 2 and Tier 3 cities, where the stakes of every unresolved dispute are often personal and immediate. In places like Sehore, Raipur, Jalpaiguri, and Hanumangarh, borrowers are not navigating legal jargon. They are trying to be heard in a system that rarely speaks their language, both literally and institutionally.
For many in these regions, NBFCs are the first formal credit institutions they engage with. But when disputes arise, whether due to missed repayments, loan restructuring requests, or miscommunication, the process of seeking resolution can feel inaccessible. Poor connectivity, linguistic barriers, and the absence of clear channels only add to the complexity.
To address this gap, CORD, apart from English, notices were carefully prepared and delivered in eight regional languages, including Hindi, Tamil, Bengali, Telugu, Marathi, Gujarati, Kannada, and Odia. Each communication clearly outlined the hearing process and the borrower’s rights, ensuring accessibility from the very first touchpoint. Our trained Case Managers then reached out to each party personally. On the day of the hearing, Case Managers stayed actively connected with parties throughout. They helped borrowers log in, resolved last-minute technical issues, and connected other borrowers over the call to ensure that no one was left out. One borrower, a farmer, explained that his loan had been paid on time until a sudden medical emergency involving his son-in-law disrupted the family’s finances. In another instance, a farmer joined the hearing, explaining that he was waiting for the current crop cycle to conclude before they could resume their EMIs.
This effort was not about faster closure alone. It was about designing a resolution that is geographically inclusive, linguistically responsive, and procedurally fair. At CORD, we believe that digital enforcement frameworks must not only scale. They must also adapt to ground realities. True system design accounts for bandwidth limitations, economic uncertainty, and human dignity in equal measure.