Capital India, which finances small and medium enterprises and provides affordable home loans, will invest $25 million (Rs 187 crore) equity and debt funding in Credenc to help the education lending fintech firm grow its book to Rs 3,000 crore by 2025.
“The annual spend on college fees in India is around $50 billion of which only 5% is financed by organised lenders. With Credenc, Capital India intends to change the segment’s perception and reduce underwriting risk basis Credenc’s future employability score,” S K Narvar, promoter of Capital India, said.
Credenc, founded by Avinash Kumar and Mayank Batheja in 2017, is a technology led education loans platform.
The founders will continue to run operations for Credenc, Narvar said.
Credenc uses a proprietary artificial intelligence model to track data points to predict the future income of students applying for loans. It provides financial assistance based on student potential and future income instead of the existing financial capability of the family which is typically the primary factor considered by traditional education lenders, the firm said.
“Our partnership with Capital India will give us both balance sheet and cost of capital advantage which will help in disrupting the education lending segment by providing loans to students who were until now ignored, helping lakhs of Indian students achieve their potential,'' Kumar said.
Credenc soon aims to launch India's first student focused neo bank. It is currently developing a mobile app to help students and parents with credit, accommodation, employability, savings, forex, and investments.