Avanse Education Loans, a joint venture between housing finance company DHFL and International Finance Corporation (IFC) is eyeing Rs 20 crore worth of education financing taking place in Gujarat in the current fiscal.
The non-banking finance company has set an ambitious target of achieving education loan portfolio of Rs 250 crore nationally by the end of fiscal 2015 from the current Rs 63 crore.
“We have initiated operations in Gujarat only recently. But we are getting good response and we expect Rs 20 crore loan portfolio in Gujarat by end of fiscal from Rs 1.25 crore now,” said Neeraj Saxena, Chief Executive Officer, Avanse Education Loans. Of the total loan sanctions in Gujarat, about 70 per cent will be for overseas and 30 per cent for domestic courses.
So far, the company has sanctioned loans to about 25 students in the past eight months in Gujarat. The company charges 12.25 per cent to 13.5 per cent interest rate on the education loans based on the risk profile of the course and institute and the future prospects of the student. The average ticket size for sanctioning the loan is about Rs 18 lakh. The company has zero overdue against the education loan NPAs of public sector banks hovering around 3.5 per cent, Saxena claimed.
The number of students opting traditional courses such as medical, engineering and management/finance was far more than those taking up new-age courses such as image consulting, film editing, photography among others. The company offers loan for shorter-term professional courses as well.
“The education finance business in India has grown at the rate of 30 per cent CAGR over the past five years from Rs 15,200 crore in 2006-07 to Rs 50,300 crore in 2011-12.
According to Saxena, the market size of the higher education financing in the country is about Rs 80,000 crore including domestic and overseas courses.
The company has already tied up with 40 institutes in Gujarat including Mudra Institute of Communication Ahmedabad, Adani Institute, and Dental Colleges for their courses.