There are several exciting developments taking place in the Indian banking sector in recent times. State Bank of India (SBI) has cut its MCLR further, bringing it below 8% for the first time in several years while other banks continue lowering their rates of interest on home loans.
Additionally, Indian banking is also witnessing the emergence of several co-lending agreements or systems aimed at greater outreach of loan offerings in the retail category. One of the recently inked co-lending deals is between Bank of Baroda (BoB) and JM Financial.
Key details worth knowing
Bank of Baroda (BoB) has ventured into a strategic co-lending deal with JM Financial Home Loans Limited or JMFHL which is a housing finance subsidiary of JM Financial Limited. This agreement will pertain to co-lending in the retail loan segment for home buyers. The agreement will aim at creating a highly efficient and effective model for retail lending which will sync the expertise and knowledge of both financial entities. The focus will be on offering smooth experiences for borrowers in the retail home loan segment.
The Executive Director at Bank of Baroda, Vikramaditya Singh Khichi, has already stated that the retail home loan category holds immense future potential and this can be better tapped via this novel co-lending agreement between JM Financial Home Loans and Bank of Baroda (BoB). He has also talked of how the bank possesses ample expertise in terms of ensuring lower cost of funds and processing mortgage loans and remains confident of this partnership enabling faster access to credit for prospective home buyers while also giving a boost to Indian real estate in general.
The Managing Director at JM Financial Group, S Vishal Kampani, has also opined that this partnership with Bank of Baroda will be a great way to enhance the long-term relationship that JM Financial possesses with Bank of Baroda (BoB). He has also added that there are complementary skill-sets and knowledge across franchises of both financial institutions, thereby enabling better and more attractive retail home loan offerings for Indian customers.
Some other things to keep in mind
JMFHL (JM Financial Home Loans) is a subsidiary of JM Financial Products. This is the first entry of the JM Financial Group into the fast-growing housing finance or home loan business in the Indian market. The company emphasizes majorly on affordable housing, catering to customers in the mid-income and low-income segments throughout Tier-1 and Tier-2 cities and towns.
JMFHL has a loan book of approximately Rs. 550 crore and it is now looking to scale up this figure by at least 5 times after this co-lending agreement with Bank of Baroda (BoB). The CEO at JM Financial Home Loans, Manish Sheth, has already stated that the co-lending model will enable both entities to delve deeper into the Indian home loan market and this partnership will be generating greater value for the customers and both organizations alike. 80% of the home loans will be on the balance sheet of the PSU entity, namely Bank of Baroda (BoB) while 20% will be on the balance sheet of JM Financial Home Loans (JMFHL).