Business India ×

Published on: Sept. 20, 2021, 7:07 a.m.
Massive opportunity for GyanDhan
  • Mehra and Sinha: finding loans for every student

By Lancelot Joseph. Executive Editor, Business India

The personal experience of the founders, Ankit Mehra, CEO and Jainesh Sinha, COO with regard to financing their education fuelled their aim to equalise educational financing opportunities. GyanDhan is the brainchild of Mehra and Sinha, who saw an opportunity to make the education loan segment better and more efficient for customers. “The inspiration stemmed from our difficult experience to fund our education,” says the duo. 

Mehra, who completed his MBA from IESE Business School in Barcelona, faced several challenges to convince Indian lenders to finance his masters. Similar financial constraints were faced by Sinha, an alumnus of IIT-Delhi, to fund his IIT JEE preparation. “We studied the market more closely, identifying some key issues with the process such as procedural delays, processing time, and product limitations”, says Mehra.

“The result of this analysis helped us formulate a system, also known as the GyanDhan Credit Score, that favours students,” points out Sinha who started with the initial investment from Indian chapters of Stanford Angels and Harvard Angels, including Satyen Kothari and Praveen Gandhi in 2016. “We are excited to have GyanDhan in our Edtech portfolio as the most flexible and customer-centric student finance company. Their strong growth during the pandemic is the strongest endorsement of their resilience and customer focus. We also like their impact credentials through the tailored loan offerings for the broader market including financially excluded target segments”, observes Vishal Bharat, MD of CBA Capital. 

Last year, the company raised funds from Education Catalysts Fund, an education-based impact investment fund to kick-start its NBFC operations. “We are planning to raise $7 million in equity and a similar amount in debt”, adds Sinha. 

 The genesis 

GyanDhan journey has partnered with major lenders in the Indian and international market. The State Bank of India, Bank of Baroda, Axis Bank, ICICI Bank, HDFC Credila, Prodigy Finance, MPower Financing, to name a few. Since its inception in 2016, more than 4,500 students have availed of the services of the company to finance their education abroad and in India.

Recently, the company forayed into the domestic market, partnering with several institutions to finance short-term and vocational courses, college and school fees. The company basically operates a marketplace for education loans, working to make the education loan segment accessible and affordable for the students. To this end, they have partnered with major lenders in the market working to simplify the loan process and launch new products in partnerships with other lenders.

“We find the right loan for every student given their profile and then works with the relevant lending partner to complete the loan documentation. We get paid a percentage of the loan amount as our fee income. The services are free for the student. In some segments, we also have a revenue share with the lending partner in lieu of providing a risk cover for the loans done through its platform”, discloses Mehra. 

In addition to the marketplace, the company also has an NBFC which participates in the marketplace activities. The NBFC provides flexibility to structure loan products targeting segments that are not addressed by traditional lenders. “This has also allowed the company to improve customer experience by reducing turnaround time and improving conversion.

The key revenue drivers in the NBFC are the interest income and the processing fee it charges the customers, and the subvention income paid by the training institutes”, adds Sinha who ccurrently offers loans for studies abroad in a B2C construct and loans for domestic courses in a B2B2C construct.

“The domestic college education loans market is predominantly catered to by the public sector banks and this contributes the lion share of the $12 billion education loan outstanding”, says Mehra adding that the largest players in the study abroad space include SBI, HDFC Credila, Avanse, and Prodigy Finance, with Credila being the biggest NBFC focused in the education loans vertical. “However, the overall quantum of loans is fairly small compared to the opportunity in this. Lenders in this space are yet to adopt a truly digital offering, and the student employability assessment in the overall risk assessment is limited to only a small number of players”. 

The domestic upskilling – vocational and coaching/K-12 segment is fairly nascent and is the place where all the new-age players predominantly operate. Risk models are yet to be proven in this space, but the opportunity is massive as this is the fastest-growing segment of all three segments. The focus in the domestic segment will be to add new partners and expand the loan offering over the next 12 months.

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