Bank of Baroda (BoB) on Thursday entered into a co-lending agreement with JM Financial Home Loans Ltd (JMFHL) to offer loans to homebuyers.

The tie-up is expected to create an effective lending model by combining the expertise of both BoB and JMFHL to provide a seamless experience to retail home loan customers.

JMFHL is a subsidiary of JM Financial Products and this marks the JM Financial group’s foray into the housing finance business. It largely focuses on the affordable housing segment, catering to low and mid-income customer segments in Tier 1 and Tier 2 towns.

“There is a huge potential in the retail home loan space that can be tapped through co-lending partnerships between large organisations such as Bank of Baroda and finance players such as JM Financial Home Loans. With the bank’s expertise in mortgage loan processing and low cost of funds, we are confident that this partnership will accelerate credit delivery to homebuyers, thus boosting the home buying segment,” Vikramaditya Singh Khichi, executive director at BoB, said while commenting on the partnership.

While the loan book of JMFHL stands at around Rs 550 crore, it is looking to expand this number by around five times following the tie-up with Bank of Baroda.

“We believe co-lending will enable us to penetrate deeper into the home loan market. The alliance will create value for both businesses and customers,” said Manish Sheth, CEO of JM Financial Home Loans.

While 20 per cent of the loan will remain on the balance sheet of JMFHL, the rest 80 per cent will be in the books of the PSU bank.