Co-lending

[Virtual Presenter] This is a training video about employee engagement and HR. In today's competitive business world, it's important for organizations to create a positive work environment and involve their employees to achieve the best results. The purpose of this presentation is to provide you with the essential tools and strategies for successfully leading and managing a highly engaged workforce. Let's now begin with our first topic: Co-lending..

[Audio] This presentation will cover Chapter 1 "Overview" of co-lending, including the financial structure and revenue benefits it offers. We will also discuss the standardized framework of an escrow account and the important role of a trustee in the co-lending process. Co-lending is a financial arrangement where multiple lenders provide a loan to a borrower, resulting in a more efficient and diverse lending approach. One of the main benefits of co-lending is increased revenue for both lenders through risk and reward sharing, and it also allows for expansion into new customer segments. In co-lending, all funds are held in an escrow account, serving as a centralized mechanism for reconciling transactions and ensuring transparency. The standardized framework of this account facilitates a smooth process for all parties involved. A trustee is appointed to manage the escrow account and ensure appropriate use of funds according to agreed terms. They play a vital role in maintaining the integrity of the co-lending process and safeguarding the interests of all parties. Next, we will cover the customer journey and process workflow, including the application and approval process, as well as funds disbursement. It is crucial for all parties to have a clear understanding of the workflow to ensure a seamless experience for the borrower. In co-lending, loan collection and monitoring is a joint effort between lenders. This process must be carefully managed to maintain a positive customer experience and ensure timely repayments. After funds have been disbursed, lenders must work together to monitor the loan and any changes in the borrower's financial situation. These post-disbursement activities are essential in maintaining a healthy and successful co-lending arrangement..

[Audio] In this presentation, we will be discussing co-lending, a model in which two lenders, the junior and senior lenders, work together to originate and fund a loan. The loan amount is divided in a pre-agreed ratio, with the junior lender providing 20% and the senior lender providing 80%. The key aspect of this model is the shared risk and responsibilities between the two lenders, allowing for a collaborative approach in providing loans. This leads to a more efficient and streamlined process as each lender can focus on their respective strengths and responsibilities. Now, we will examine the roles of the junior and senior lenders in a co-lending arrangement. The junior lender is responsible for customer sourcing, initial underwriting, collections, and customer services and plays a vital role in engaging with borrowers and ensuring a smooth loan process. The senior lender, VHFC, contributes the majority of the loan portion and has final approval of the home loan according to agreed policy guidelines. Their involvement is crucial in decision-making and ensuring compliance with loan policies. The data on this slide provides a closer look at the key components of co-lending and how it differs from traditional lending approaches. This model allows for a more collaborative and efficient way of providing loans, benefiting both the lenders and borrowers. Let's now move on to the next slide to explore the benefits of co-lending and its impact on employee engagement and HR..

[Audio] On slide number 4, we will be discussing the financial structure and revenue for our co-lending project. Funding is important for any business, and our project is no exception. Let's first look at the funding split. 80% of the funding will come from Vastu Housing Finance, and the remaining 20% will come from our junior lender. This partnership ensures adequate financial resources for our project. Moving on, our project will follow a co-lending model, where both lenders will have ownership and responsibility in the loan portfolio. This reduces risk and increases efficiency in managing the loan. As for revenue, our project aims for sustainable and profitable returns for both lenders. With our combined expertise and resources, we are confident in achieving our financial goals. In summary, the financial structure and revenue are crucial for the success of our co-lending project. The partnership between Vastu Housing Finance and our junior lender provides a strong foundation for our project and we are excited for the potential growth and opportunities it will bring. Let's continue to the next slide for more details on our co-lending project..

[Audio] The benefits of co-lending and a standardized framework are manifold and extend to various stakeholders involved in the lending process. By partnering in co-lending, junior lenders are able to access larger capital pools and increase their business volumes. This presents the potential for higher returns and allows for expansion into underserved or semi-urban/rural markets. For borrowers, co-lending offers quicker service and blended interest rates, providing timely access to funds and potentially lower interest rates. This is particularly beneficial for those in urgent need of funds or small businesses seeking affordable financing options. The standardized framework for co-lending also brings numerous advantages, such as classification of partners based on risk level and adherence to RBI/NHB regulations. This ensures a transparent and regulated process and reduces potential risks for all parties involved. The standardized framework also promotes efficiency and risk control through clearly defined roles and technology. This results in a smoother and more efficient lending process and enhances the overall customer experience. The benefits of co-lending and a standardized framework are significant, as shown in the table on this slide, and lead to a win-win situation for all parties involved. This serves as an example of how collaboration and innovation in the lending industry can bring positive outcomes for lenders, borrowers, and the overall market..

[Audio] In co-lending, there are three escrow accounts that are used to ensure transparent and fair flow of funds. These accounts include the Disbursement Account, Collection Account, and Cash Collection Account. An escrow account serves as a neutral platform for temporarily holding funds before they are transferred to the intended party. The Disbursement Account holds funds contributed by lenders and is used to disburse loan amounts to the borrower. The Collection Account receives borrower repayments and distributes them to lenders based on their agreed proportion. The Cash Collection Account is used for collecting cash at the branch level and ensures a secure process. These accounts play a crucial role in ensuring the smooth flow of funds for all parties involved in co-lending..

[Audio] This segment of our training video will discuss the role of a trustee in lending or co-lending arrangements. A trustee is a neutral third party responsible for safeguarding and managing assets or funds on behalf of multiple parties. In this case, the trustee's role is crucial in co-lending arrangements as they act as a bridge between the two lenders and the borrower. Their main responsibilities include managing escrow accounts for disbursement, collection, and cash collection, as well as releasing funds to the borrower according to the agreed upon terms. This ensures fair distribution of funds among all parties involved. The trustee also splits EMI repayments between the lenders based on the pre-agreed ratio of 80:20, promoting fairness and transparency in fulfilling financial obligations. Additionally, the trustee maintains records and ensures compliance with the co-lending agreement to prevent any potential disputes. To better understand the role of a trustee, let's review the data in slide number 7 of this presentation. Thank you for your attention, and we will continue our discussion on co-lending and its various aspects in the following segments..

[Audio] This slide presents important data regarding the roles and responsibilities of the Junior Lender and VHFC (Senior Lender). The Junior Lender's responsibilities include lead generation, document collection, and document execution. As for VHFC, their role involves document verification and sharing with the Trustee for storage. They are also responsible for lead generation and document collection, as well as underwriting and disbursing 80% of funds through escrow. Both the Junior Lender and VHFC are responsible for document storage, with the Junior Lender collecting and executing the documents, and VHFC verifying and sharing them with the Trustee. This concludes our discussion on the roles and responsibilities for Co-lending. We hope this table has provided a clear understanding of the division of work between the two roles..

[Audio] Slide 9 out of 14 will cover the co-lending process between Junior Lender and VHFC. The process includes onboarding, credit assessment, pre-disbursement steps, sanctioning, and disbursement. Onboarding involves Junior Lender logging customer cases on its own system or through API integration into VHFC's "Pulse" platform for efficient information gathering. The credit assessment is based on a jointly agreed policy to ensure consistent and compliant decisions. Legal and technical verification is done by Junior Lender and vetted by VHFC before moving forward with the loan. Sanctioning involves joint recommendation and approval by both lenders. During disbursement, both lenders fund loans through a joint escrow account with a ratio of 80:20 for fair distribution and accountability. Junior Lender is responsible for NACH mandates and documentation, while CERSAI/NOI registration is handled by either Junior Lender or the Security Trustee. The table on the slide illustrates the customer journey and workflow, outlining the responsibilities of each party in the co-lending process. Thank you for your attention and please proceed to the next slide for more information..

[Audio] In this slide, we will discuss the collection and monitoring process for our co-lending program. Our Junior lender manages the collection process through various channels, such as National Automated Clearing House, UPI, Net Banking, and Cash. All payments are collected in an ESCROW account, which is reconciled and settled in T+1/T+2 days. Our Trustee follows the instructions provided by the lenders to ensure efficient and transparent collection and monitoring. The Junior lender and Trustee also share realization reports and bounce data to track and analyze the program's performance. In the case of delinquent accounts, VHFC handles all escalations, waivers, and settlements with principal loss, subject to approval from our team. The collection and monitoring rate is maintained at 1.8, demonstrating our commitment to effectively managing the co-lending program. Moving on to the table on this slide, which shows data on our collection and monitoring process. We invite you to continue to our next slide for further information on our program..

[Audio] Slide number 11 of our presentation focuses on VHFC's role in co-lending arrangements. As the junior lender, VHFC is responsible for managing all post disbursement activities for our portion of the loan. This includes adhering to RBI and NHB guidelines and reporting to credit bureaus. It's important to note that only VHFC is required to report this information separately, as the junior lender is not responsible for this aspect. Our aim is to promote transparency and accountability in all of our co-lending partnerships, and this is one way we strive to achieve that. The table on this slide outlines the specific post disbursement activities that the junior lender handles, such as timely loan disbursement, managing documentation and collaterals, and monitoring loan performance. By prioritizing and efficiently managing these activities, we are able to maintain a successful co-lending relationship with our partners..

[Audio] Slide number 12 out of 14 in our presentation on Co-lending discusses the primary responsibility of Customer Service and Grievance Redressal for the Junior lender. Customer service is crucial in any organization, especially in the banking and financial sector. The Junior lender is in charge of managing customer complaints and ensuring a smooth and satisfactory experience. Our complaint turnaround time is a key metric to measure our efficiency in customer service, with a target of resolving complaints within 15 days. If a complaint remains unresolved, we involve the Virtual Home Finance Company (VHFC) for resolution within 30 days. To maintain transparency and accountability, the Junior lender provides weekly reports to the VHFC on the status of customer complaints. This allows us to track progress and take necessary steps to improve our services. Additionally, the Junior lender handles customer communications through various channels, including SMS, email, WhatsApp, and our online portal, providing a quick and convenient way for customers to reach out to us and for us to address their concerns. In summary, the Junior lender is responsible for handling customer service and grievance redressal. Our goal is to provide efficient and satisfactory services to our customers, with the Junior lender playing a crucial role in achieving this. Let's move on to the next slide..

[Audio] Slide number 13 out of 14 discusses the monthly governance calls held between the CXOs and Heads of both partners in order to effectively manage and monitor the performance of our co-lending portfolio. These calls allow our VHFC leadership teams to review the portfolio's performance and operational processes. As part of our risk management strategy, we closely monitor key risk indicators such as delinquency rates, GNPA, and bounce trends. Trigger-based controls are applied when these indicators breach certain thresholds to mitigate risk. In addition, a dedicated hind sighting team conducts monthly reviews of a sample of cases to ensure the quality of our processes and identify any operational gaps. Now let's look at the data in the "Governance, Risk & Audit" table, which highlights the importance and effectiveness of our governance and risk management processes in the success of our co-lending partnership. Let's now move on to the final topic on the next slide..

[Audio] Our presentation on Co-lending with VRSTIEJ Housing Finance has come to a close, ladies and gentlemen. We hope you found this session informative and valuable. As discussed, Co-lending is a unique collaboration between VRSTIEJ and our partners in the banking and financial sector. This partnership empowers us to provide efficient and competitive housing finance solutions to our customers. Through Co-lending, we have been able to expand our reach and serve a larger segment of the population, not only helping us achieve our business objectives, but also contributing to the overall economic growth of the country. We would like to thank our partners and esteemed audience for their time and attention. Your interest in our Co-lending model showcases the importance of employee engagement and human resources in driving success. We hope this presentation has given you a better understanding of our Co-lending approach and the benefits it brings to all parties involved. We are confident that this partnership will continue to strengthen and bring more value to our stakeholders. Thank you for listening, and we look forward to further discussions and collaborations with you in the future. We wish you all a great day ahead..