It is clear that this year more students will be heading abroad for studies?
MB: 100%, the number will surpass even the pre-covid figures as after two years of closure, scenario is positive, the fear factor is gone almost and students despite occasional spikes are comfortable in returning to classrooms.
This means, more work for you. Going a little in flashback, can you tell us what made you two to get into space of education loans in the first place?
MB: The annual spend on college fees in India is around $50 billion or ₹3.5+ lakh crore, of which only 5 per cent is financed by organised lenders according to reports. While study aboard segment is the most organized and serviced loan, same is not true for admissions to domestic colleges. Banks are reluctant to provide loans to students beyond about top ranked 100 professional and other high education colleges. It is only after nudging and government pressure that a small proportion of students are able to secure loans from other colleges and that too on basis of parental income evidence. As such, education loan as a finance product is being used below its huge potential.
AK: We two have worked before together on startup and our synergy and complementing each other’s strength brought us to this idea of solving a problem that has real impact for our country. Look at the size of India and its youth population. With everything on our side, we still don’t have fintech product that will make us comparable to advanced nations where education loans is a norm and accounts for 40-50% of student education expenditure. So, we have set out to see that we too are somewhere near to that benchmark and that required this kind of technological idea mix.
Well said. While study abroad is well served and even those going aboard are sure about loans and its process, a lot of domestic students aren’t that privileged. You yourself said, banks and financial intuitions are reluctant to lend education loans. And this has translated into a gloomy attitude among students and families, who would rather settle for lesser or inexpensive choice than go for a loan?
MB: Yes, that may be true. That’s why we have started basing our loans on student’s ability and potential. Using technology we have undertaken a rigorous evaluation process using a proprietary artificial intelligence (AI) model, which tracks 15 million data points to predict students’ future income after applying for loans. So this kind of disruption ensured that loans will be given on student potential and future income instead of the traditional family’s existing financial capability. In the past four years, Credenc has partnered with more than 1000 colleges and institutes and as things normalize, we’ll be more grounded.
Your decision of becoming an associate sponsor of Lucknow Super Giants and getting your logo on sleev of players is part of this outreach if I am correct?
AK: Yes there is a link between education and cricket in terms of skills and lessons but more than cricket is a huge sport in our country. And choosing LSG brings in that element of aspiration of masses and gels well with our own vision. So, advertising in IPL is strategic.
Obviously, a considerable majority of lower and middle class, who are so much invested in education of their children, who often get dejected for not able to support their higher education have reasons to be happy?
MB: Yes, we are probably the only company in the country that lend money to these students as I said our model is employability and potential. And, we have simplified our criteria to enable them.
What documents and process is there for loan barrowers?
MB: We serve loans in three categories: study aboard, domestic studies and short-term courses. The first step for all is enrolment and filling online application with details including family income etc. After this KYC as mandated by RBI is required which includes PAN, Aadhaar Number, Bank statement/Income document etc. While for Study Abroad the process is completely online and approvals can take just a few hours, domestic loan students needed to write a 45-minute test for assessment of logic, communication skills etc followed by an interaction with company executives. After that loans is approved with a few days.
In case of short-duration courses, the arrangement is with institutes and platforms offering these courses and therefore is much easily available.
A question also arises, do you provide loan for every course, every country or are there any exceptions?
MB: We provide loans to a broad range of courses that have a job outcome and therefore STEM and management and may be other professional courses are supported. For regular countries like USA, UK, Canada, Australia, Germany, Singapore, UAE, New Zealand etc, we give readily but for countries say Russia, China or other lesser known destination, it will be case to case basis on college and course reputation mainly.
What about medicine and medicine abroad especially after Ukraine crisis?
MB: Medicine is popular and has an opportunity for us and even we have a product but we are working more on it and hopefully in next six months, we will roll it out. About providing foreign bound, we haven’t and don’t see we will for these kind of destination.
Do you have education programs for young school students on education loans?
MB: No, right now we are focused on capturing the mindscape of college students but as we move ahead such things are in our scheme of plans.
Can we expect Credenc as one of the unicorns in becoming soon?
AK: Hope we were good at predicting but surely in 3-4 years we’ll be in a better position. Target is to become second or third largest company in this space and with 5000 loans on an average monthly, we hope add Rs 1000 Cr every year in coming next a few years. And with this we’ll also write a chapter in merit-based education loan success story in India hopefully and change the way people look at this market.