SBI co-lending. SBI enters into co-lending tie-ups with 5 housing finance companies

State Bank of India has entered into co-lending 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-lending tie-ups with PNB Housing Finance, IIFL Home Finance, Shriram Housing Finance, Edelweiss Housing Finance and Capri Global Housing Finance.

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

To further improve the penetration in this segment, SBI is actively looking at co-lending opportunities with multiple HFCs, per the statement.

Enhancing distribution network

Dinesh Khara, Chairman, 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.

“Such partnerships align with our commitment to accelerate effective and affordable credit to small home 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 scheduled commercial banks (excluding small finance banks, regional rural banks, urban co-operative banks and local area banks) on CLM on November 5, 2020, with a view to leveraging the comparative advantages of banks and NBFCs in a collaborative effort in respect of all categories of priority sector lending.

CLM is based on the symbiotic relationship between banks and NBFCs. Lower cost of funds from banks and the greater reach of the NBFCs is expected to benefit borrowers.

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