Credenc, a Delhi-based education lending platform, is targeting a loan disbursement of 1,000 crores by FY23.
The organization’s business strategy has shifted from a marketplace sector to that of a loan provider, similar to a non-banking financial company. Capital India, an Small Medium Enterprise (SME) lending-focused NBFC, acquired an unreported share and invested $25 million in the educational loan platform, prompting the shift in the business model. The venture was done through a mix of financing and equity.
Credenc typically provides loans in the K-12 to higher education segments, with ticket sizes ranging from 20,000 to 1 crore. Short-term loan (lending for/up to one year) accounts for over 40% of its portfolio.
The bulk (60%) of the portfolio is long-term (about 7-10 years). Credenc has a monthly run rate of 40-45 crore, according to Mayank Bhateja, Founder & Director. Prior to switching to a direct lending business model, the firm had a loan book of 700-800 crore, with revenues coming from service fees, origination fees, and other payments.
“We hope to close FY23 with a ₹1,000 crore loan book and ₹3,000 crores for 2025. The change in business model happened in the second half of 2021. Typically the second half is a slower one. As we get into FY23 and the academic session, the monthly run rates too shall pick,” Bhateja told BusinessLine
India spends about $50 billion (3.5 trillion) on education fees, with only 5% paid through organized methods. Credenc’s educational loan portfolio contains study abroad loans, domestic education loans, and short-duration or up-skilling and re-skilling course loans, among other categories.
The organization is increasing its operations throughout the industry in order to bring on more universities and reach out to new students. It collaborates with over 3,000 colleges in India and around the world.
Study abroad loans, domestic education loans, short-duration or up-skilling and re-skilling course loans, among others, are the categories of Credenc’s educational loan portfolio. Credenc’s NPA is in the 0.3% area.
According to a response to the Parliament in 2021, roughly 9.55 per cent of education loans given by public sector banks in India were categorized as non-assets as of December 31, 2021. 3,66,260 accounts worth Rs 8,587 crore have gone bad out of the total education loan outstanding.