Education-focussed fintech player Credenc is targeting disbursal of about Rs 100 crore loan to students in 2021-22 as the company has got a USD 25 million (Rs 187 crore) commitment from Capital India Finance Ltd (CIFL). The investment in Credenc will be in the form of both equity and debt, Capital India said in a joint statement, without giving details on the break-up of the debt and equity part.
With this investment, Credenc is looking to build a book of Rs 3,000 crore by 2025, it said. Credenc Co-Founder Mayank Batheja said the operating fund from Capital India is committed for over a two-year period and it will be available as needed by Credenc. 'The debt component has already been made available for Credenc to use,' he said.
He said the company is targeting disbursal of Rs 100 crore as a student loan in 2021-22, keeping in mind the pandemic and the bleak admission cycle. 'The annual spend on college fees in India is around USD 50 billion (over Rs 3.5 lakh crore), of which only 5 percent is financed by organized lenders.
'With Credenc, CIFL intends to change the segment perception and reduce underwriting risk basis Credenc's future employability score, which will help this percentage go up to at least 15 percent, aiming to lend Rs 3,000 crore by 2025,' S K Narvar, promoter, Capital India said. Credenc provides education loans at the rate of 11-14 percent. The average ticket size for domestic higher education is around Rs 7 lakh with loan tenure of 7 years, Batheja said further.
Avinash Kumar, Co-founder, Credenc said the partnership will give both the companies balance sheet and cost of capital advantage which will help in disrupting the education lending segment by providing loans to students. Credenc offers education loans covering K-12 school fees, online upskilling courses, higher education as well as study abroad courses at the click of a button and will soon launch India's first student-focused neo bank.
It is currently developing the entire student education ecosystem helping students and parents with credit, accommodation, employability, savings, forex, and investments on a mobile app. Capital India is an SME and affordable housing finance-focussed NBFC. Founded in 2017, Credenc is a Delhi-based fintech working as the digital finance desk of over 1,000 colleges across 17 cities in India.