Kochi: NBFCs (Non-Banking Finance Companies) are offering easy education loans to students even as commercial banks are often not so helpful to them. These organisations are now offering loans even to courses that are not so common or mainstream.
Banks are usually averse to providing educational loans because they are apprehensive whether customers would be able to repay them in time. This is a genuine fear because about 10 per cent of educational loans provided by banks are already non performing. Banks are also apprehensive about various courses and the organisations that offer such courses. In fact RBI governor Raghuram Rajan has warned banks from providing loans to students pursuing obscure courses from dubious institutions.
However, what banks have not been able to capitalise is now fertile grounds for NBFCs especially because cost of education has shot up in recent times. In fact, the number of students seeking education in foreign nations has increased by more than 15 per cent.
The main highlight of NBFCs is that they offer loans to non-traditional courses. They also offer support for the complete cost of the course. They also disperse loans quite quickly while commercial banks are found to be laggards when it comes to educational loans. To top it all, they offer unlimited loans and easy EMIs.
Perhaps that is the reason why students are opting for such companies for their financial needs. Recently, Avanes Financial Services, a unit of Dewan Housing Finance, dispersed Rs 343 crores of educational loans in 2015-16. In this financial year, it is targeting Rs 800 crores of business. About 4000 students have benefitted so far and about 70 per cent of loans were provided for financing foreign education.
Credila Financial Services, a unit of HDFC Group, has been constituted only to provide educational loans and offers loans to Indian students in 40 nations.
Muthoot Finance Ltd is also offering such loans using gold as collateral.#FCs offering educational loans