Mumbai: Mortgage company Dewan Housing Finance Corp. Ltd (DHFL) is entering the education loan business with the launch of a non-banking finance company (NBFC).
The Avanse Education Loans unit, set up with a capital investment of Rs.50 crore, will provide loans for higher education in India and overseas at a base rate of 11.5%. Loans will cover the cost of education apart from living and other expenses.
International Finance Corp. (IFC), DHFL’s partner in the home loan business, will invest to the tune of 20% in the unit. The rest will be invested by DHFL and its promoters.
The business opportunity is large given the 30 lakh students pursuing higher studies annually, said Kapil Wadhwan, chairman and managing director, DHFL.
The market for student loans is expected to continue growing at an annual rate of about 30%, driven by the projected growth in education sector spending, he said at a press briefing in Mumbai on Thursday.
The company plans to add 5,000 customers in the first year and is aiming for the business to grow to Rs.4,000 crore in the next five years.