NEW DELHI: Capital India, a company offering finance to SMEs and retail clients, is investing $ 25 million in education loan startup Credenc.
Credenc is a technology-based education loan platform launched in 2017 and currently serving about 1,000 colleges in 17 cities. The new capital, raised through both leveraged and equity capital, will help Credenc expand its loan portfolio in a rapidly expanding sector in India, and to a greater extent after technology adoption has expanded in scale over the past 18 months.
S.K. Narwar, founder of Capital India, said the annual college tuition costs in India are around Rs 3.5 million, of which only 5% is funded by organized lenders. Narwar said the founders will continue to manage Credenc’s operations “as we don’t want to disrupt the organization and we believe they are the best at understanding the business.”
“Our partnership with Capital India is very strategic and will give us an advantage in both balance sheet and cost of capital, which will help disrupt the education lending segment by providing loans to students who have so far been ignored, helping millions of Indian students reach their potential. “said Avinash Kumar, co-founder of Credenc.
The startup is conducting a rigorous assessment process using its proprietary artificial intelligence (AI) model, “which tracks 15 million data points to predict the future income of students applying for a loan.” Lending is based on the potential of students and their future income, and not on the existing financial capacity of the family, which is usually the main factor considered by lenders in traditional education.
Credenc offers education loans covering K-12 school fees, online continuing education courses, higher education as well as study abroad courses, and plans to provide a loan of Rs 3,000 crore by 2025.
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