Shadow banks go beyond education loans to attract students

Bombay : Non-Banking Financial Companies (NBFCs) Arrange Currency and Credit Cards, Laptops, Electric Vehicles, Mobile Phones and Accommodation Abroad for Student Borrowers, Aiming to Become Financial One-Stop Shops . The companies are teaming up with phone and car makers to attract more students, at a time when many are upgrading their skills through courses or heading abroad for higher education.

After two years of pandemic-disrupted campuses and flights, 2022 sees an upsurge in students going abroad. Most new sessions start in early August or September and students are leaving now.

“We are looking at other financial products that our student borrowers may need. We have started offering top-up loans, where students who have taken out loans can opt for another tranche,” said Ankit Mehra, co-founder and managing director of GyanDhan, an NBFC.

Last year, only two students applied for top-ups from GyanDhan, while last month alone, 115 students took out top-up loans from GyanDhan. 2-10,000,000.” This is the impact of the depreciation in the value of the rupee and high inflation in the United States. We are also working with companies to provide credit card and debit card offers change,” Mehra said.

After a pandemic-fueled boom, e-learning has cooled as classrooms reopened, tempering loan demand and investor interest in the segment. Some NBFCs avoid the segment due to a higher perception of risk; therefore, expanding options can help NBFCs improve disbursement rates.

“We aspire to become the lender of choice for Indian learners. By offering learner-centric services such as student cards, learner insurance, assessment-based program recommendations, we are building India’s largest learner ecosystem,” said Varun Chopra, co-founder and managing director of fintech NBFC Eduvanz. It also plans to offer affordable loans allowing students to choose from e-bikes, MacBooks, smart phones and portable devices. The typical loan in this segment is 1.5-2,000,000. Ancillary services also help appliance and automobile manufacturers reach more customers. In most cases, manufacturers offer a discount to customers of these NBFCs.

NBFCs that offer smaller tranches of loans for office workers or graduate students who want to upgrade their skills before employment, also offer electric vehicles, laptops and cell phones.

Mayank Sharma, head of global partnerships and country head of Prodigy Finance, said his firm was also considering ancillary services to offer. “In the near future, we will work on this and discussions are ongoing. Students don’t need to go to multiple platforms,” ​​he said.

Prodigy Finance said student loan applications in the first seven months of 2022 were up 89% from 2021 and 86% in 2021 from 2020. The company said that compared to the first seven months of 2020, before covid, there was a 27% increase in student loan applications compared to the same period a year ago.

Generally, loans are granted at flat rates and students repay after a period of time stipulated in the NBFC. Fintechs can keep a certain percentage of refunds, when reimbursing their alliance partners, which can be K-12 schools or original equipment manufacturers (OEMs). Percentages vary. According to the Reserve Bank of India, outstanding education loans from banks stood at 84,375 crores as of June 17, 2022.

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