Dewan Housing arm to lend to educational institutions
Loans to be given to universities, colleges, coaching classes and pre-schools for adding infrastructure such as buildings, libraries, laboratories
Dec 29, 2014
Source : Business Standard


Mumbai: Avanse Education Finance Services, a group company of Dewan Housing Finance, is planing to give loans to educational institutions this year. The loans will be given only to established institutions for their expansion, said Neeraj Saxena, chief executive officer, Avanse.

"We will give loans to universities, colleges, coaching classes and pre-schools for adding infrastructure such as buildings, libraries, laboratories. This will allow us to judge the business and repayment capacity. We will not give loans to those who are yet to start operations as that requires more capital and is riskier," he said.

The ticket size of such loans will be in the range of Rs 50 lakh to Rs 5 crore. Avanse is registered as a non-banking financial company, in which Dewan Housing has a majority stake.

International Finance Corporation, an arm of the World Bank, holds a 20 per cent stake. Since its inception about a year ago, Avanse has disbursed loans worth about Rs 65 crore to 750 students for higher education. The average ticket size of loans sanctioned is in the range of Rs 15-16 lakh.

According to Saxena, in addition to loans for the regular under-graduate and post-graduate courses such as engineering, medicine and management, there is plenty of demand for loans for new age courses such as image consulting, photography, film writing, music, etc. Banks typically don't give loans for such courses.

"Before sanctioning the loan, we do a rating of the college and the course because not all courses are job-oriented. If we feel that a particular course has no job potential, then we may not even approve the loan," Saxena said. The college's placement record for the past three years, average salary the students get, any court case or blacklisting against the college (especially in case of overseas colleges) are considered, while approving the loan.

Avanse has tied up with 700 educational institutions and also educational consultants for disbursing loans. Its own offices are in Mumbai, Delhi, Pune and also operates through Dewan Housing's offices in Bengaluru, Kolkatta, Chennai, Hyderabad and Ahmedabad.

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