Lenders prefer NBFCs for education loans, as banks suffer from NPA menace

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Education LoanNon-Banking Financial Companies (NBFC) are emerging as the new leaders in the education loan domain as Public Sector Banks are bearing the burden of Non-Performing Assets (NPAs).

Over the past few years, several standalone education loan firms are coming up, offering new and innovative product range.

In addition to this, by adopting the student-led approach, which comprises of complete academic screening of students, NBFCs are now redefining the scenario of education loan and lending services.

According to media reports, Avanse Financial Services, a partner education loan firm of Dewan Housing Finance Corporation Limited (DHFL) has recently closed education loans of worth Rs 1.08 billion.

Further, Eduvaz Financing, an NBFC that offers short-term courses, also provides education loan ranging from Rs 5,000 to Rs 100,000 and makes use of tech-driven resources to form a network of institutes and students.

According to Reserve Bank of India, total education loan outstanding is reported to be at Rs 705 billion (as on February 2018), against Rs 720 billion in February 2017, a fall of 2 per cent.

As of now, nearly 95 per cent of the education loans are handled by public sector banks, reports rating agency Care.

NPAs pertaining to education loan by public sector banks were reported at Rs 51.91 billion(as on March, 2017), which accounts to 7.67 per cent of the outstanding education loan of Rs 677 billion, according to official data.

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