India-Canada strife unlikely to hit education loans growth: CARE Ratings

The rising diplomatic tensions between India and Canada are not expected to significantly impact the student loans provided by finance companies for overseas education, according to CARE Ratings.

Assets Under Management (AUM) in retail education loans by Non-Banking Financial Companies (NBFCs) have seen a threefold increase, soaring from Rs 8,028 crore in March 2021 to Rs 26,175 crore in June 2023. Loans for students heading to Canada specifically grew from Rs 1,426 crore in March 2021 to Rs 5,183 crore in June 2023, according to the rating agency's data.

Driven by robust demand among Indian students for education abroad, specialised NBFCs have successfully carved out a niche in the overseas education loan sector. Preferred education destinations for Indian students include countries such as the USA, Canada, the UK, Australia, and New Zealand.

CARE Ratings indicated that Indian students in Canada contribute nearly CAD 10 billion annually, a figure projected to rise in the long term. The agency does not anticipate any adverse actions from the Canadian government that could affect asset quality.

The growth trajectory for these NBFCs is expected to continue, as students are more inclined to explore alternative education destinations rather than delaying their academic goals, the agency added.