InvestorQ : What are the merits of the co-lending arrangement recently signed between HDFC and Indiabulls Housing?
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What are the merits of the co-lending arrangement recently signed between HDFC and Indiabulls Housing?

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Niti Shenoi answered.
8 months ago
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HDFC and Indiabulls Housing Finance recently signed a co-lending arrangement for home loans. Of course, HDFC book size is 7 times that of Indiabulls. So, what is the deal? It blends balance sheet strength of HDFC with the fleet-footed approach of Indiabulls. Now, Indiabulls can take a bigger loan book exposure without negatively affecting its return ratios. HDFC gets the benefit of the reach and deep customer interface of a smaller player.

This is how the deal will actually work. HDFC will house 80% of the co-lent asset in its books while 20% will be with IBHFL. In all such cases, the NBFC will do the loan processing and disbursal plus collection processes. Co-lending was first permitted in 2018 but the NBFC crisis prevented any progress. The customer interaction will be IBHFL as HDFC will only take a major part of the capital risk.

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