Non-banking finance company, Dewan Housing Finance Ltd (DHFL), entered into the education loan segment with 'Avanse' where it aims to have a portfolio of Rs 200 crore in the first year of operations.
Avanse will be a subsidiary of DHFL with a capital base of Rs 50 crore, of which the World Bank-promoted International Finance Corporation (IFC) has agreed in-principle to pick up a 20 per cent stake for about Rs 10 crore. The promoters of DHFL will own 51.1 per cent stake” said Kapil Wadhawan, Chairman and Managing Director, DHFL.
The loans will be provided at an interest rate over and above the base rate, which is at 11.5 per cent. “We aim to grow at a margin of about 2.5 to 3 per cent targeting a portfolio of Rs 4,000 crore in the next five years,” Wadhawan said.
The new entity will focus towards providing loans for higher studies in engineering, business, management and new age courses like Aquaculture, Photo Journalism, among others.
According to Wadhawan, education loans business is still untapped by the non-banking entities which provides a large business opportunity with around 3 million students pursuing higher studies annually.
Avanse will cover complete cost of education including living and other expenses. The company offers educational loans with minimum loan value being Rs 50,000 up with repayment tenure of up to 10 years.