PNB Housing Finance plans tie-ups with banks for co-lending in housing

PNB Housing Finance is looking at forging tie-ups with some banks for co-lending in the housing loan sector and is hopeful that these partnerships will be win-win for consumers, banks and NBFCs, a top official has said.

In November 2020, the RBI had allowed the co-lending scheme for banks under which they can co-lend with the non-banking finance companies (NBFCs), including the housing finance companies (HFCs), based on a prior agreement.

"We have got our policy approved on the co-lending and you will shortly be hearing some announcement from the company in terms of some agreement that we will enter with banks," Hardayal Prasad, Managing Director and CEO, PNB Housing Finance, told PTI post company's third quarter earnings last week.

Co-lending is a great opportunity for everyone, "for consumers, for HFCs or NBFCs which have high borrowing costs" and for a bank which may not have that where with all reach, it is good for all the three, Prasad said.

Prasad said that co-lending will tremendously help consumers in bringing down the cost of loan.

As the housing financier is promoted by Punjab National Bank (PNB), no such agreement can take place with the lender.

"As a related party transaction, I cannot do it with the promoter (PNB), we will be doing it with other banks. We have identified the banks and first we would like to do it with a few of them so that we perfect this and we will find out what are the friction, if there are any problems etc, we will go through the whole process once we have perfected it then we can go ahead and do it with larger number of players," he added.

On being asked about the expectations from the Union Budget, the official of the PNB Housing Finance said that the section 80(C) under the Income Tax Act provides relief on the interest and other things on home loans, however, more can be done.

"As already under the section 80(C) there is relief on interest and other things, I think what I would like is that they (government) should come out with some separate relief under section 80(C) and these should be given for principal and interest and that will help significantly. May be they can also think of giving additional benefit under 80(C) itself, or the REIT. All these things, if they do it, it is going to help significantly," Prasad said.

He also highlighted that whatever is in the purview of states, they are doing it already such as reduction in stamp duty, development fee, premium charges etc.

Many of the states have done it and many will continue to promote these because everybody knows that once the real estate sector starts kicking-in, there are almost more than 100 industries which will get benefited out of this and it is a recognised fact, Prasad added.

Prasad said the company is seeing a good amount of traction in business currently as consumers are returning back to take loans.

"We are seeing that the traction is coming in the market and the consumers are returning back to take loans. There are lot of things that are happening, one is that new bookings are taking place and second is that there are re-sales that are happening.

"Those who are holding multiple holdings, they are trying to get out of those properties, so all kinds of things are happening today," he said.

PNB Housing registered a net profit of Rs 232 crore in the third quarter ended December 2020 of the current fiscal year, which was nearly flat from a year ago. Total revenue, however, fell by 9 per cent to Rs 1,896 crore from Rs 2,075 crore a year ago.