Digital lending firms offer loans for education in India
Digital lending start-up firms have commenced offering loans for education and professional courses, according to an ET report. These start-ups, writes Pratik Bhakta, are expanding from focusing mostly on the personal loans and consumer lending arena. For instance, the Bangalore-based Zest Money is aiming at carving its own niche in the professional education space and the company has forged alliance with firms such as Upgrad, NMIMS, Great Learning, Acadgild and Edureka in order to render loans to entry or mid level professionals who yearn to acquire new skill sets, the report said.
Lizzie Chapman, cofounder of Zest Money tells the daily, “India’s online education market is set to grow to $2 billion by 2021, as per industry reports. Better quality course content and faster adoption of ed-tech will significantly help people up-skill themselves which will boost economic growth.”
As per the report, PayU-backed start-up claims that it will disburse around 1,000 loans in this space by the end of this month and should grow at a rate of 30% per quarter. Zest Money, which was primarily working in the online ecommerce check out financing space, believed that with people getting skilled through these educational portals, their consumption would go up, thereby also helping their original business of consumer loans, the report pointed out.
Brahma Mahesh, founder of FinMomenta is quoted as saying by the daily that FinMomenta, an early-stage start-up, which primarily lends for children’s education, is trying to expand to professional courses as well. “We have partnered with players like Pathfriend, Manipal, Mediversity, Simplilearn, ICICI Securities School for Financial Learning for funding professional courses they offer”, he added.
What is more, FinMomenta is targeting about 50 loans per month for IT courses and 300 loans per month for specialised courses in agriculture technology, which also has humongous demand. The start-up has three non-banking finance companies and RBL Bank as its lender partners.
Mahesh told ET that several students are from rural backgrounds and do not have a credit history for them or for their parents, hence to get a personal loan from a bank is very difficult. While it might push up interest rates, in many cases institutes are open to bearing the interest rates, since quick financing options give them more applicants.
According to Rishi Kedia, founder, Neev Finance, in many cases, interest is borne by the institution hence, the loans become interest-free for the student, thereby making it easier for them. Furthermore, since Neev is directly partnered with the institutions, rejections are very low and disbursals are also automated and quick.”
Neev Finance, which focuses on the education loan sector, had started loans for professional courses six months ago, and has already given out 1,000 loans, added the report.