NBFCs and the Future of Financial Redress: A Strategic Lens

“When credit becomes real-time, redressal must become real-time too.”
Reimagining resolution in an era of digital lending and distributed ecosystems

Author: Jincy Jose

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.

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:
The inclusion of a multi-ODR/ADR clause in lending agreements allows 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. This clause aligns with the Perkins Eastman judgment of the Supreme Court by eliminating unilateral appointment of arbitrators and ensuring neutrality through a pre-agreed institution like CORD. It addresses a key hurdle for NBFCs where awards become unenforceable due to unilateral appointments. A pre-emptive ODR clause fosters fairness, enforceability, and faster recoveries across lending portfolios.

Bringing Resolution Closer to the Ground

In this quarter, CORD partnered with leading NBFCs to conduct a focused resolution drive. CORD’s commitment to fairness as well as the robustness of our processes were tested when we facilitated over 80 lending-related disputes in just two days. To be clear, 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, prepared and delivered notices 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. 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.