PNB Housing Finance, SBI enter into strategic co-lending partnership

PNB Housing and SBI will combine their capabilities to provide an efficient and seamless experience to both existing and new retail home-loan customers.

The two financial institutions will jointly do due diligence and co-originate loans at an agreed ratio of 20:80.

PNB Housing will service customers throughout the loan lifecycle, including sourcing, documentation and collection, under an agreed information sharing arrangement with SBI.

The agreement will enable PNB Housing to provide lending solutions to customers at competitive rates of interest with significant benefits.

The RBI, in 2020, allowed the co-origination of housing finance companies with banks to enable non-banking finance companies and other banking institutions to offer mutually beneficial risk assessment services.

The revised co-lending model, introduced in November 2020, gives lenders greater flexibility vis-à-vis higher credit for the unserved and underserved segments of the population.

The arrangement allows housing finance companies to enter into co-lending, while allowing banks to account for co-originated loans to be included in PSL targets.

PNB Housing Finance Managing Director and CEO Hardayal Prasad said, “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.”

Dinesh Kumar Khara, Chairman, State Bank of India 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 homebuyers in India and contribute to the vision of 'Housing for All by 2024.'"