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To increase footprints in the unorganized sector, the National Bank of India is preparing to launch a co-loan model for mortgage loans, the bank announced on Wednesday. In a co-loan model, essentially two lenders come together to disburse the loans. This alliance helps to disburse a small portion of the loan amount and find more customers.

In November 2020, the Reserve Bank of India authorized the co-loan program for banks and non-bank financial corporations (NBFCs). The model aims to improve the flow of credit to the unserved and underserved sector of the economy and to make funds available to the final beneficiary at an affordable cost, given the lower cost of funds from banks and a lower cost. greater reach of NBFCs.

“If the State Bank of India embarks on a co-lending model for home loans, it will go a long way to helping it penetrate those markets which were the home of the NBFCs,” said Shobhit Agarwal, Managing Director and CEO of ANAROCK. Capital.

Under this, banks are allowed to co-lend with all registered NBFCs (including HFCs) on the basis of prior agreement, the RBI said. Co-lending banks will take their share of individual back-to-back loans on their books. However, NBFCs will be required to keep a minimum 20% share of individual loans on their books, the central bank said.

On this basis, the two partner institutions are to enter into an agreement that should specify the terms and conditions of the agreement, the criteria for selecting partner institutions, specific product lines and areas of operation, the RBI said. Banks can claim priority sector status with respect to their credit share while engaging in the co-lending model under specified conditions, the central bank said.

“As part of the co-lending model, we could see the SBI expand its reach to this unorganized sector. In addition, the co-loan partner can help bring local expertise and help the bank to do due diligence on the ground. Thus, this will help boost SBI’s footprint in the unorganized sector, ”Agarwal said.

PNB Housing Finance plans to link up with some banks for co-loans in the home loan business, the lender said earlier. “We have had our co-lending policy approved and you will shortly hear an announcement from the company regarding an agreement we will enter into with the banks,” said Hardayal Prasad, Managing Director and CEO of PNB Housing Finance. .

“The co-loan as a financial tool will greatly benefit businesses. The real estate industry has demanded that lending be relaxed and slowly with the efforts of the government, the RBI and the banks, this will certainly help the industry. Gradually we are seeing a lot of banks and financial institutions joining hands to promote this tool and hopefully more financial institutions will come forward to create a favorable ecosystem for the industry ”, said Mani Rangarajan, Group COO, Housing.com, Makaan.com and Proptiger.com.

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