Delhi-based education loan platform, Credenc is looking at a loan disbursal of ₹1,000 crore by FY23. The company has changed its business model, as it moves from a marketplace segment to being a loan provider, on the lines of a non-banking financial company.

The change in business model came after Capital India, an SME lending-focused NBFC, picked up an undisclosed stake and invested $25 million in the educational loan platform. The investment was made using a combination of debt and equity.

Typically, Credenc provides loans in the K-12 to higher education segment with ticket sizes varying between ₹20,000 to ₹1 crore. Nearly 40 per cent of its portfolio comes from the short-term category (lending for/upto one year). The majority (60 per cent) of the portfolio is long-term of around 7-10 years.

According to Mayank Bhateja, Founder and Director, Credenc has a monthly run rate of ₹40-45 crore. Before the change in business model – to a direct lending one – the company had a loan book of ₹700 -800 crore, with earnings coming in the form of service fees, origination fees, among others.

“We hope to close FY23 with a ₹1000 crore loan book and ₹3,000 crore 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,” he told BusinessLine.

India spends close to $50 billion (₹3.5 trillion) on tuition fees, of which just 5 per cent is through organised channels.

Credenc’s educational loans portfolio is spread across categories like study abroad loans, domestic education loans, short-duration or up-skilling and re-skilling course loans, among others.

The company is ramping up its presence across the sector as it looks to bring on board more colleges and also reach out to new students. It works with over 3000 colleges, in India and abroad.

Its educational loans portfolio is spread across categories like study abroad loans, domestic education loans, short-duration or up-skilling and re-skilling course loans, among others.

Credenc’s NPA is in the 0.3 per cent range.

In a response to the Parliament in 2021, it was said nearly 9.55 per cent of education loans extended by public sector banks in India were categorized as non-performing assets as on 31 December. Out of the total education loan outstanding, 366,260 accounts worth Rs 8,587 crore have turned bad.

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