India Business Journal - Education loans to grow fastest with AUM set to expand by 45% in FY25

INDUSTRY

Education loans to grow fastest with AUM set to expand by 45% in FY25

IBJ Bureau
Sep 09, 2024

Education loans, primarily those to fund courses overseas, will continue to be among the fastest-growing segments for non-banking financial companies (NBFCs) because of rising demand for higher education, CRISIL Ratings has said.

Their assets under management (AUM) is expected to grow at a healthy clip of 40-45 per cent to cross Rs 60,000 crore in this financial year, according to the rating agency.

By definition, AUM is the market value of investments managed by entities.

After robust growth of over 80 per cent and 70 per cent in FY23 and FY24 respectively, NBFCs’ education loan AUM rose to Rs 43,000 crore as on March 31, 2024.

On the asset quality front, metrics should remain stable despite country-specific concerns, a CRISIL Ratings analysis indicates, the report has added.

“The number of Indian students studying abroad is estimated to have doubled in the past five years to around 13.4 lakh as of the last financial year. Only a tenth are being funded by these NBFCs, and even including education loans by banks, the financed quantum is not much higher. What that indicates is that a large portion of overseas education is being funded through alternative means – informal financing, self-funding, or perhaps other forms of loans,” Ajit Velonie, a senior director of CRISIL Ratings, has said.