NBFCs Giving Tough Competition To Banks!
When it comes to disbursing of loans, the statistics give a clear indication that NBFCs have taken lead over banks, especially in unconventional sectors.
The Banks, especially public sector banks, may be perceived as the best vehicle for loans of all kinds, but in practicality, it is not so. There are so many requirements and formalities to be performed for loans that it becomes a time consuming and cumbersome task for many. Some lenders are refused loan on the pretext of non-compliance.
On the other hand, NBFCs have kept their rules and regulations light as well as flexible. Understanding the needs of those who are in need of financial aid yet cannot fulfill the required formalities demanded by banks, NBFCs extend loan services on easy terms.
Education Loans: A Booming Segment!
An aspiring student’s dream of technical higher education or getting a degree from abroad, both demand lots of money. A good degree is of paramount importance as it is directly related to superior job, comfortable lifestyle and social prestige. Many a time, these ambitions of a deserving candidate are crushed due to financial constraints.
To overcome the misery of such student’s, education loans are a blessing. Even the repayment structure is unique as it does not seek repayment until the student completes his degree, thus, the sword of EMI does not hang over them from the time they take the loan.
How NBFCs Have Taken Lead Over Banks?
With the cost of educational degrees shooting up, the demand for a loan in this segment has gone up manifolds. Almost all banks and NBFCs are in the fray, looking to capitalize on this opportunity.
Major factors on which NBFCs are preferred over Banks-
|Offer loan only to mainstream courses||Offer loans to unconventional & vocational courses too|
|Generally, demand collateral or security against the loan||Do not seek any collateral or security,|
|Extensive formalities and paperwork||Easy on formalities and requirements|
|Face restrictions & caps, extra expenses related to the course is not covered||Covers 100% cost of the student during the course|
|The loan is sanctioned on the basis of co-obligation of parents or guardian as joint co-borrowers||The loan is sanctioned on the basis of the student’s future employment prospects & GRE scores|
Make Hay While The Sun Shines!
If you are an entity looking ahead for NBFC incorporation or NBFC registration, then this is the most opportune period. Let your company complete the compliances at the earliest and capitalize on the fertile grounds of education loan.
It will bring a two-fold advantage for the company as it will yield great profits and also help it carve a niche for itself in the industry. The company, of course, will need to develop effective tools which can predict employability, before the loan is sanctioned. All factors like academics (previous results), entrance test score, the stream for which the student has opted, the viability of the course and also the employment history of the institute or university, should be thoroughly looked into.
There are many big names which have ventured into this segment and are reaping rich profits. Avanse Financial Services, a unit of Dewan Housing Finance; Credila Financial Services, a unit of HDFC Group; Muthoot Finance Ltd., etc. are doing brisk business. There is no saturation to be seen at the moment and therefore, more and more newcomers are entering this space!
Avail Assistance & Aid From MUDS!
Looking for efficacious help on anything related to NBFCs?
Contact MUDS and consult experienced professionals who will guide you to accomplish your ambition at the earliest!
“The NBFCs have been a gamechanger in the Education loan segment as they cater to those students too who are generally kept out by the banks; they are helping so many dreams turn to reality!”
-Shweta Gupta, Founder, and CEO, MUDS