Bank of India signs pact with IMGC for mortgage guarantee on home loans

Public sector lender Bank of India and Indian Mortgage Guarantee Corporation (IMGC) have signed a pact to provide mortgage guarantee-backed home loan products in the affordable housing segment. It will cover salaried and self-employed home loan customers.

IMGC's guarantee will mitigate the risk of defaults for the bank, allowing it to potentially offer more favourable loan terms to borrowers, the company said in a statement.

Mahesh Misra, managing director and chief executive officer of IMGC, said the products will promote financial inclusion and aid in early home ownership.

Leveraging IMGC's guarantee expertise and the bank's extensive network of over 5,100 branches across India, this collaboration will enable the lender to provide home loan products with greater flexibility and security to potential homeowners.

IMGC has surpassed Rs 25,000 crore in home loan guarantees for over one lakh customers across 400 locations nationwide. The firm has collaborated with over 23 lending institutions, including banks, housing finance companies (HFCs) for mortgage cover, the corporation said in a statement.

The mortgage guarantee works as a shock absorber and supports banks to increase their lending in the affordable housing finance segment which carries high default risks.

IMGC commenced operations in March 2014, underwriting a securitisation pool originated by Dewan Housing Finance Limited, according to ICRA.