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Avanse Education Finance Services, a group company of Dewan Housing Finance, is planing to give loans to educational institutions this year. The loans will be given only to established institutions and for expansion, said Neeraj Saxena, CEO of the Avanse.
"We will give loans to universities, colleges, coaching classes and pre-schools for adding infrastructure such as buildings, libraries, laboratories. This will allow us to judge the business and repayment capacity. We will not give loans to those who are yet to start operations as that requires more capital and is riskier,'' he said.
The ticket size of such loans would be in the range of Rs 50 lakh to Rs 5 crore.
Avanse is registered as a non-banking financial company, in which Dewan Housing has majority stake. The International Finance Corporation (IFC), an arm of the World Bank holds 20 per cent stake. Since its inception over a year ago, Avanse has disbursed loans worth more than Rs 65 crore to over 750 students for higher education. The average ticket size of loans sanctioned is in the range of Rs 15-16 lakh.
According to Saxena, in addition to loans for the regular under-graduate and post-graduate courses like engineering, medicine and management, there is plenty of demand for loans for new age courses like image consulting, photography, film writing, music,etc. Banks typically don't give loans for such courses.
"Before sanctioning the loan we do a rating of the college and the course because not all courses are job-oriented. If we feel that a particular course has no job potential, then we may not even approve the loan,'' he says.
The college's placement record for the last three years, average salary the students get, any court case or blacklisting against the college (especially in case of overseas colleges) are considered while approving the loan.
Avanse has tied up with 700 educational institutions and also educational consultants for disbursing loans. It's own offices are in Mumbai, Delhi, Pune and also operates through Dewan Housing's offices in Bangalore, Kolkatta, Chennai, Hyderabad and Ahmedabad.
