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Indiabulls Housing Finance Ltd (IBH) on Wednesday said it has entered into a strategic co-lending partnership with housing finance major HDFC Ltd to offer housing loans to homebuyers at competitive rates.

Indiabulls said it will originate retail home loans as per the jointly-drawn up credit policy and retain 20% of the loan in its books, while the remaining 80% will be on HDFC Ltd’s books. It added that Indiabulls will service the loan account throughout the life cycle of the loan.

“Co-lending partnership with HDFC Ltd will act as a cornerstone to IBH’s new balance-sheet light growth business model. Moreover, technology-led co-lending will help IBH offer convenient and seamless experience to its customers as well as help expand its reach to tier three and four towns of the country," it said.

In September 2018, the Reserve Bank of India (RBI) had first allowed banks to co-originate priority sector loans with non-banks, provided NBFCs had at least 20% exposure in the joint loan. Under the co-origination model, borrowers get an all-inclusive interest rate as may be agreed upon by both lenders.

“While RBI regulations in this regard pertain to a tie-up between a bank and a non-bank, there are no specific prohibitions on two non-bank lenders from using the co-lending model," said a banking sector analyst on condition of anonymity.

Meanwhile, Gagan Banga, vice-chairman and managing director of Indiabulls Housing Finance had told CNBC-TV18 on 15 February that the mortgage lender would collaborate with banks. “At a big picture level, the realisation at least the Indiabulls is that we would want to run a collaborative model with banks rather than trying to compete with banks," he was quoted as saying.

As of 31 December, 65% of Indiabulls’ asset book comprised of housing loans and its total loan book stood at 70,282 crore. In comparison, HDFC Ltd had a loan book of 5.52 trillion in the same period.

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