Dewan Housing Finance Limited (DHFL) has forayed into the education loan space with Avanse Financial Services, a non-banking financial company (NBFC).
International Finance Corporation (IFC) has agreed in-principle to pick up a 20 per cent stake in Avanse for Rs 10 crore, said Kapil Wadhawan, chairman and managing director of DHFL. Avanse will offer education loans starting from Rs 50,000 and there will be no cap on the upper limit. The loan will cover the entire tuition fee of the course, living expenses of the student and travelling expenses if the student is opting for higher education in a foreign country.
The base rate will be 11.5 per cent and the spread would be charged after evaluating the loan application on the nature of course, reputation of the institution and placement track record of the institute. Wadhawan said DHFL decided to tap the education loan space as there were not many private sector companies offering study loans.
HDFC’s Credila is the only other specialised NBFC offering education loans.
The education loan segment is mostly serviced by banks.
Avanse targets a portfolio of Rs 200 crore in the first year and expanding it to Rs 7,000 crore in five years.