New Delhi, Aug 6 (IANS): World Bank group member International Finance Corporation (IFC) Tuesday said that it has started investing $2.3 million (Rs.14 crore) in Avanse Financial Services for providing education loans to Indian students.
"The private sector can play a significant role in improving access to quality education, especially in emerging markets," said Serge Devieux, IFC director for South Asia, in a statement.
"IFC's investment in Avanse will help students access financing for pursuing higher education while shaping the market for education finance."
According to IFC, its investment in the start-up firm which is also an associate company of Dewan Housing Finance could help an estimated 90,000 students avail education loans over the next seven years.
Apart from providing the equity infusion, IFC will also advise the firm to strengthen its credit appraisal, underwriting processes, and risks management systems.
IFC cited that alternative financing channels are needed in India as there will be a growing demand for higher education expected in mid-sized and smaller cities. However, education loans for students of premier educational institutions are hard to come by.
Currently, India is one of the world's largest education markets, has over 150 million people in the 18-23 years age group.
"IFC's investment is an endorsement of our business plan in promoting growth in an underserved market," said Kapil Wadhawan, chairman, Avanse Financial.
"With IFC's global industry knowledge and expertise, Avanse can demonstrate the viability of financing higher education in India."
Dewan Housing is an existing client of IFC. In 2003, IFC provided a loan of around $12.5 million to the company. IFC has also co-invested in Aadhar Housing Finance, a company jointly promoted by DHFL Group and IFC that provides home loans for low income segments.
IFC is one of the largest multilateral investors in private education in emerging markets, investing to improve access, lower costs, and help students prepare for employment.
IFC’s education portfolio stands at over $660 million across 42 projects in 24 countries, including in some of the poorest countries in the world. The total value of these projects is about $1.8 billion.