While it might push up interest rates, in many cases institutes are open to bearing the interest rates, since quick financing options give them more applicants.
BENGALURU: Digital lending startups have started giving out loans for education and professional courses, expanding from focusing mostly on the personal loans and consumer lending space. Bengaluru-based Zest Money is betting big on lending for professional education purposes and has already partnered with players like Upgrad, NMIMS, Great Learning, Acadgild and Edureka, among others, to provide funds to entry- or mid-level executives wanting to acquire new skill sets.
“India’s online education market is set to grow to $2 billion by 2021, as per industry reports. Better quality course content and faster adoption of edtech will significantly help people upskill themselves which will boost economic growth,” said Lizzie Chapman, cofounder of Zest Money.
The PayU-backed startup claims that it will disburse around1,000 loans in this space by the end of this month and should grow at a rate of 30% per quarter. Zest Money, which was primarily working in the online ecommerce check out financing space, believes that with people getting skilled through these educational portals, their consumption would go up, thereby also helping their original business of consumer loans.
FinMomenta, an early-stage startup, which primarily lends for children’s education, is trying to expand to professional courses as well. “We have partnered with players like Pathfriend, Manipal, Mediversity, Simplilearn, ICICI Securities School for Financial Learning for funding professional courses they offer,” said Brahma Mahesh, founder of FinMomenta. The company is targeting about 50 loans per month for IT courses and 300 loans per month for specialised courses in agriculture technology, which also has huge demand. The startup has three non-banking finance companies and RBL Bank as its lender partnekrs.
Mahesh said several students are from rural backgrounds and do not have a credit history for themselves or for their parents, hence to get a personal loan from a bank is very difficult. While it might push up interest rates, in many cases institutes are open to bearing the interest rates, since quick financing options give them more applicants.
“In many cases, interest is borne by the institution, hence, the loans become interest-free for the student, thereby making it easier for them,” aid Rishi kedia, founder, Neev Finance.
“Also, since Neev is directly partnered with the institutions, rejections are very low and disbursals are also automated and quick.”[“Source-economictimes”]