SBI enters into co-loan agreements with 5 housing finance companies

The State Bank of India has entered into co-loan agreements with five Housing Finance Companies (HFCs) to sanction home loans to the unserved and underserved segments.

India’s largest bank has entered into co-loan agreements with PNB Housing Finance, IIFL Home Finance, Shriram Housing Finance, Edelweiss Housing Finance and Capri Global Housing Finance.

Related stories
Affordable home loans: Shriram Housing Finance, SBI in co-lending pact

Two entities will serve home loan clients under RBI’s co-loan model

The shortage of affordable housing continues to be a major concern for India, especially for the economically weaker and informal sections of society, according to an SBI statement.

To further enhance penetration in this segment, SBI is actively seeking co-lending opportunities with multiple HFCs, according to the statement.

Improve the distribution network

Dinesh Khara, Chairman of SBI, said this collaboration will enhance the bank’s distribution network as it aims to extend its credit reach to more home loan borrowers in the unserved and underserved segments.

“These partnerships align with our commitment to accelerate efficient and affordable credit for small buyers in India and contribute to the vision of ‘housing for all by 2024,'” Khara said.

The Reserve Bank of India had issued a Circular to Regular Commercial Banks (Excluding Small Financial Banks, Regional Rural Banks, Urban Cooperative Banks and Local Banks) on CLM on 5 November 2020, with a view to leveraging comparative advantages of banks and NBFC in a collaborative effort with respect to all priority sector lending categories.

CLM is based on the symbiotic relationship between banks and NBFCs. The lower cost of funds for banks and the greater reach of NBFCs should benefit borrowers.

Under the CLM, HFCs/NBFCs are required to keep a minimum 20% share of individual loans on their books, with the balance held by banks.

Comments are closed.