Fintech companies have played a pivotal role in transforming education financing in India by offering software and service solutions to the BFSI (Banking, Financial Services and Insurance) industry. Through their SAAS (Software as a Service) solutions, these companies, including Novel Patterns, have introduced innovative technologies and streamlined operations to facilitate the seamless onboarding of students and optimize lending processes within the education sector. Their contributions have empowered financial institutions and banks to enhance their operations and provide a more efficient experience for both lenders and borrowers.
One significant contribution of fintech companies is the introduction of peer-to-peer lending platforms. These platforms connect borrowers who apply for student loan in India with willing lenders who offer student loans at lower interest rates compared to traditional banks. This innovative approach enables students to access education loan without collateral or credit history. By leveraging technology, these platforms efficiently match borrowers and lenders, making education financing more accessible and affordable. Furthermore, fintech companies have revolutionized education financing through the introduction of digital wallets and mobile banking solutions. These platforms allow students to make online payments for tuition, fees, and other educational expenses, saving time and reducing transaction costs. By eliminating the need to visit a bank, students can manage their finances more efficiently, ensuring uninterrupted progress in their educational journey.
Some data about the education loan sector in India with sources:
The education loan market in India is expected to reach USD 150 billion by 2025. (Source: CARE Ratings)
The market is currently dominated by public sector banks, but private banks and NBFCs are gaining market share. (Source: RBI Report: Sectoral Deployment of Credit)
The average education loan interest rates in India is around 10%. (Source: ClearTax)
The maximum loan amount that can be borrowed under the government’s education loan scheme is Rs. 7.5 lakh. (Source: MHRD)
Fintech companies are playing a growing role in the education loan sector by providing digital lending platforms and other services. (Source: Fintech India)
In response to a question raised in Lok Sabha on 13 February 2023, the Government of India provided information on the loans made available by PSBs for education abroad. The data is available for ten public sector banks (PSBs). According to these figures, around 4.61 lakh students received study-abroad loans from 2012-23 to 2021-22. This equals to Rs. 39.26 thousand crores in total. (Response in Lok Sabha -Unstarred Question 1759)
According to Public Sector Banks (PSBs), 4,61,017 students received educational loans to study overseas in the previous 10 years, with 42,364 receiving education loans to study medicine.
