Shares of State Bank of India (SBI) gained on Friday, a day after the public sector bank announced its partnership with five housing finance companies.

During the morning trade, SBI shares were trading nearly 1% higher on the BSE at Rs 491.85. At 2:51 pm, it was trading 0.48% higher at Rs 489.45. 

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SBI has entered into co-lending agreements with five housing finance companies – PNB Housing Finance, IIFL Home Finance, Shriram Housing Finance, Edelweiss Housing Finance and Capri Global Housing Finance to provide affordable home loans to underserved borrowers.

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According to the pacts, SBI will co-lend home loans to the underserved segment in accordance with RBI guidelines. Shortage in affordable housing finance continues to be a major concern for India, especially for the economically weaker section, SBI said in a statement.

To improve the penetration in this segment, SBI is actively looking at co-lending opportunities with multiple HFCs, it added.

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RBI had issued guidelines on the co-lending scheme for banks and HFCs/NBFCs for priority sector lending to improve the flow of credit to the unserved segments and make funds available at an affordable cost. The co-lending model seeks to provide the borrower with the best interest rate and better reach. Under this agreement, HFCs/NBFCs must retain a minimum of 20% share of the individual loans on their books.

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SBI Chairman Dinesh Khara said, “This collaboration will enhance our distribution network as we aim to extend our credit reach to more home loan borrowers in the unserved and underserved segments. Such partnerships align with our commitment to accelerate effective and affordable credit to small home buyers in India and contribute to the government’s vision of ‘Housing for All by 2024”.

The partnership agreement was signed in Mumbai and handed over by Khara to the respective heads of the HFCs.