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    RBI has simplified process of co-lending model for NBFCs; will work with banks: Indiabulls Housing Fin’s Gagan Banga

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    RBI has simplified process of co-lending model for NBFCs; will work with banks: Indiabulls Housing Fin’s Gagan Banga

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    The Reserve Bank of India (RBI) has simplified the process of the co-lending model for non-banking financial companies and Indiabulls Housing Finance Ltd (IBHFL) will run collaborated model with banks rather than compete with them, said Gagan Banga, Vice Chairman and Managing Director of the housing finance major on Monday. Banga also said that we will do 66 percent via direct lending and balance under the co-lending model.

    The Reserve Bank of India (RBI) has simplified the process of the co-lending model for non-banking financial companies and Indiabulls Housing Finance Ltd (IBHFL) will run collaborated model with banks rather than compete with them, said Gagan Banga, Vice Chairman and Managing Director of the housing finance major on Monday. Banga also said that we will do 66 percent via direct lending and balance under the co-lending model.
    Speaking about the good sequential earnings from IBHFL in the third quarter, Banga said, “I believe that the spread improvement has just started last quarter while rates had moved down quite materially for NBFCs in general given the risk aversion in the market, the rates were not effectively getting transmitted. It is only over the last 3-4 months that transmission has started. My expectation is that over the next two quarters we are actually going to be much larger beneficiaries of the reduced cost of funds.”
    On restructuring, Banga said, “At 1.50 percent we will land up creating additional provisions in the ballpark of about Rs 1,000 crore which is the provisions that we have made additionally made through the course of the current fiscal as well. We have already provided something like 3.50 percent of the loan book.”
    Macro indicators are supportive, Banga added, “On the wholesale side what has to be appreciated is that residential cycle is at 8-9 year high and sales are happening, marginal price appreciation has also started. So large part of the confidence that we have on the wholesale book performance is also stemming out of the fact that these projects we have financed would get supported by macro moves.”
    On the co-lending model, he said, “RBI has been working with all NBFCs, taking feedback and via various circulars have actually simplified the process. 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.”
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