PNB Housing Finance has entered into a strategic co-lending agreement with the State Bank of India (SBI) to offer retail home loans at competitive interest rates to homebuyers as per their convenience and tailored according to their needs. This partnership between India’s two major banks will cover mostly priority sector housing loans. This new association is expected to streamline all loan processes, thus, providing an effective and smooth experience to both existing and new retail home loan customers. These two big financial houses will work together to do sell loans at an agreed ratio of 20:80.
Under an agreement with the SBI, PNB Housing Finance will provide necessary services to customers like sourcing, documentation and collection to the clients throughout the loan lifecycle. This arrangement would allow PNB Housing Finance to give loans to customers at competitive interest rates along with major benefits.
Prior to this, SBI had entered into a co-lending agreement with other housing finance companies including IIFL Home Finance Ltd, Shriram Housing Finance Ltd, Edelweiss Housing Finance Ltd and Capri Global Housing Finance Ltd. The bank’s agreements with multiple housing finance companies would ensure cheap home loans to the unserved sector to date.
The economically weaker sections of the society often find it difficult to get loans at affordable housing rates. This has led to many people falling prey to loan sharks and other unorganized lenders in society.
Explaining how this partnership would help, Dinesh Kalra, Chairman, SBI said to LiveMint said, “We are glad to have joined hands with the HFCs under the co-lending program. This collaboration will enhance our distribution network, as we aim to extend our credit reach to more Home Loan borrowers of 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’.”
Hardayal Prasad, Managing Director and CEO, PNB Housing Finance added, “Our strategic partnership with SBI is an important extension of our retail home loan segment and will enable us to serve India’s working classes and underserved communities better. This co-lending agreement will advance our mission to provide affordable housing to a large section of the population and help them realise their goal of owning their dream home. Co-lending is the future of priority sector lending, as it reduces the cost of financing for last-mile borrowers. It will allow us to offer our affordable home loan products at competitive interest rates through a quick and seamless process. The partnership will also fast-track business growth and add significant value to customer engagement.”
Before this in 2021, PNB Housing Finance had made a co-lending agreement with YES Bank to offer retail loans to homebuyers at low-interest rates. The agreements between banks and various housing finance companies started after the Reserve Bank of India issued guidelines on the co-lending scheme for banks and housing finance companies (HFCs) and non-banking financial companies (NBFCs) for priority sector lending to improve the flow of loans to the economically stranded and vulnerable sections of the society. The guidelines were issued after the government realized how many people in this country are forced to live on rent owing to the availability of affordable housing loans. The co-lending model has ensured wider reach and better offerings of loans to those who need them the most.