Country’s largest lender State Bank of India has signed a co-lending agreement with five housing finance companies including PNB Housing Finance and Shriram Housing Finance to give loans for affordable homes.
Shortage in affordable housing continues to be a major concern for India, especially for the Economically Weaker Section (EWS) and the Informal Sections of the society. SBI is actively looking at co-lending opportunities with multiple HFCs to further improve the penetration in this segment, bank SBI chairman Dinesh Khara said in a statement. Other three HFCs with whom SBI signed agreement are IIFL Home Finance, Edelweiss Housing Finance, and Capri Global Housing Finance.
The two entities will jointly service housing loan customers as per the 20:80 co-lending model (CLM) of the Reserve Bank of India (RBI). HFCs would select the borrowers and also service it.
Saloni Narayan, deputy managing director, SBI said HFC partner will help select the borrowers and also servicing including collections. The bank’s total housing loan portfolio is about Rs 5.5 trillion and is looking to reach the Rs seven trillion mark by 2024.
RBI has issued guidelines on the co-lending scheme for Priority Sector Lending to improve the flow of credit to the unserved and underserved sectors and also make funds available at an affordable cost. The co-lending model aims to give the borrower the best interest rate and better reach.
Ravi Subramanian, MD & CEO, Shriram Housing Finance said it specializes in affordable housing finance, specifically in the self-employed segment which we call the ‘Emerging Middle Class’. Priority sector lending accounts for around 40 percent of the loan portfolio.