At present, SBI has 14 such tie-ups, which is set to expand to 25 in FY23. CS Setty, managing director of retail and digital banking at SBI, said in the current financial year, the bank firmed up a policy and internal set up for a co-lending model. And, FY23 will be the first full fina¬ncial year to grow activity.
The bank is roping in an IT vendor for building a digital interface platform for co-lending. This is to manage risks, accounting, reconciliation, minimise physical interface and reduce defaults. The platform is expected to be functional in Q1 of FY23. The co-lending arrangement will be used to scale up priority sector lending portfolios comprising agri and micro loans, and affordable housing.
Last week, it signed a co-lending agreement with five housing finance firms, including PNB Housing Finance and Shriram Housing Finance to give loans for affordable homes. The bank’s total housing loan portfolio is about Rs 5.5 trillion, and out of it, the affordable housing book in February was Rs 2.82 trillion. The two entities will jointly service housing loan customers, according to the 20:80 co-lending model of the RBI.
Non-banking financial companies (NBFCs) and HFCs would select the borrowers and also service them.
These NBFCs have the advantage of reach among the local population, which helps them to assess their financial needs. It will increase the bank’s reach and business without increasing pressure on the rural branches and control operating cost.
Historical data shows that NBFCs usually have low levels of non-performing assets (NPAs) for activities whereas a bank struggles with higher NPAs.
Banks also have cheap funds, bringing down the blended cost of loan for the customer, he added.
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