&w=3840&q=100)
Education loan growth at NBFCs to slow to 25% in FY26 on US visa curbs
The rating agency, in a statement on Wednesday, said the education loan book of finance companies in India has been the fastest-growing asset class, clocking about 50 per cent and above year-on-year (Y-o-Y) growth over the past few years.
The education loan assets under management (AUM) of NBFCs grew a rapid 48 per cent to ₹64,000 crore last financial year. That followed an even faster 77 per cent growth in financial year 2024. But growth in the ongoing financial year is seen moderating to about 25 per cent with AUM reaching ₹80,000 crore.
As a step to mitigate adverse effects of US markets, NBFCs are diversifying into new geographies and product adjacencies. While non-performing assets (NPAs) have remained stable so far, asset quality will be monitorable given the global uncertainties and a large proportion of AUM (~85 per cent) remaining under contractual principal moratorium, rating agency added.
Malvika Bhotika, director, Crisil Ratings, 'Policy uncertainties in the US, combined with measures including reduced visa appointments and the proposed elimination of Optional Practical Training norms have culled newer loan originations. This has led to a 30 per cent decline in total disbursements to that geography last fiscal.'
The disbursements linked to even Canada, the second-largest market, fell as student visa rules became stricter, including increased financial requirements via proof of available funds, and cap on permits. Consequently, overall education loan disbursements were up only 8 per cent in the financial year 2025, compared with 50 per cent in the financial year 2024.'
NBFCs have sharpened focus on other geographies. Disbursements linked to courses in the UK, Germany, Ireland and smaller countries have doubled in the past financial year as students opted for alternative destinations.
The share of such geographies in total disbursements rose to almost 50 per cent in FY25 from 25 per cent a year ago.
But this will not fully offset the decline in US-linked disbursements. Notably, the share of US in overall education loan portfolio has already come down to 50 per cent as on March 31, 2025, from a peak of 53 per cent as seen on March 31, 2024, and is expected to go down further over next few years as lenders gravitate towards other geographies.
NBFCs are also looking at domestic student loans and adjacencies such as school funding, loans for skill development, certification and coaching, Crisil added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
40 minutes ago
- Time of India
Can vertical SaaS transform niche industries with artificial intelligence
Some of the most interesting startup pitches I see these days do not promise to change the world. They promise to change a workflow, with artificial intelligence solving a critical problem of a particular industry. A messy, outdated, painful process that is too niche for large software giants to notice. That is the magic of vertical SaaS powered by artificial intelligence. Also, these businesses need very little venture capital to reach escape velocity, also known as breakeven at scale. Hence, the guerrilla way of venture building. As a seed investor, I believe this category is quietly reshaping how industries function, one focused solution at a time. Independence Day 2025 Modi signals new push for tech independence with local chips Before Trump, British used tariffs to kill Indian textile Bank of Azad Hind: When Netaji Subhas Chandra Bose gave India its own currency For those unfamiliar, vertical SaaS refers to software products or platforms built specifically for a single industry or use case. Examples include a debt collection solution used by banks and NBFCs to improve recovery and compliance, a sustainability reporting tool built for textile manufacturers to track emissions and meet ESG norms, or a customer conversation platform that uses artificial intelligence to assist call centre agents in real time. Their value lies in deep domain knowledge, built to navigate the unique rules, workflows, and challenges of each industry. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like War Thunder - Register now for free and play against over 75 Million real Players War Thunder Play Now Undo As venture capitalists, we are not just chasing trends, we are also looking for signals. And in the case of vertical SaaS, the signals are strong. These startups tend to have longer-lasting customer relationships, stronger margins, and much clearer paths to profitability. Their clients rarely churn because once an industry-specific tool is integrated into daily operations, replacing it is painful. That creates stickiness, and stickiness builds enduring companies. But what is really interesting is the timing. Several things are coming together to make this moment ripe for vertical SaaS. Cloud infrastructure is now robust and affordable, allowing startups to build faster and scale without massive upfront investment. Even traditional businesses, from clinics to small factories, are now open to digitisation, especially when the solutions speak directly to their problems. Live Events At the same time, artificial intelligence, often viewed as a general-purpose technology, is supercharging these vertical solutions. A chatbot trained on dermatology data with over one thousand patient conversations can outperform any generic artificial intelligence model in a clinical setting. That is the power of specificity, and it is what makes artificial intelligence in vertical SaaS truly transformative. I often get asked why not just invest in broader platforms that can scale across industries. The answer lies in focus. Startups that go deep into one sector understand their customers better. Their messaging is clearer. Their sales cycles are shorter. They do not have to educate the market on the value of software. They show how their product solves a known, painful problem. That is a huge advantage, especially in emerging markets where trust and usability are everything. We are seeing this play out across India and other developing economies. From supply chain platforms for agri-exporters to legal tech tools for small law firms, entrepreneurs are spotting inefficiencies that have long been ignored. These are not glamorous problems, but they are real, and solving them creates real value. In many cases, these startups are not even competing with other software. They are replacing pen and paper, Excel sheets, and WhatsApp groups. That is an enormous opportunity. Of course, capital plays a crucial role, but it is not just about writing cheques. At the early stage, vertical SaaS startups often need guidance on how to sell, how to price, and how to build for scale without losing their niche. As venture capitalists, we bring not only capital but also access. Access to pilot customers, to advisors from within the industry, and to talent that understands both technology and the specific sector. I have seen companies unlock growth just by getting introduced to the right distribution channel or hiring someone who has worked on the client side of the industry. What is also heartening is how founders in this space tend to operate. Many come from the industries they are trying to fix. They have seen the gaps firsthand, often as bankers, engineers, teachers, or logistics operators. They decided to build solutions because nobody else was solving the problems they encountered daily. That lived experience brings empathy, and it reflects in the product. The interface is more intuitive. The features are more relevant. The onboarding feels less like software and more like a helping hand. There is also something to be said about the resilience of vertical SaaS models. Most operate on a subscription basis, creating predictable revenue. Contracts are often annual, if not multi-year. This gives startups the stability to reinvest in product development and customer success, both of which matter a lot more when you are solving for depth rather than breadth. It also gives investors like us the confidence that the business can withstand market swings better than many flashier counterparts. After investing in several such companies at the pre-seed stage and witnessing their journeys first-hand, we have seen a clear pattern emerge. In categories like debt recovery, construction management and artificial intelligence-enabled sales platforms, it is possible to reach ₹300 crore in topline within the first five years when founders are solving a deep, industry-specific pain point and distribution is cracked early. With strong product-market fit, the path to ₹500–1000 crore revenue becomes a question of execution, not potential. None of this is to say that vertical SaaS is easy. Going deep into one sector means founders must be patient. The total addressable market might look small at first glance. But once the product proves itself, expansion into adjacent segments or into new geographies with similar market structures becomes a natural next step. And that is when growth really takes off. Looking ahead, I believe the next decade will see vertical SaaS companies emerge not just as profitable businesses but as quiet disruptors within industries that desperately need modernisation. Whether it is farming, education, construction, or logistics, sectors that are often overlooked in technology conversations will be transformed by software built not for the general market but for the people who wake up every day to real, operational problems. As investors, we are excited to partner with these founders. The ones who know that transformation does not always begin with scale. Sometimes, it starts with a small fix to a big problem. And from there, everything changes. Author is Founder and Managing Partner of Zeropearl VC .
Hans India
an hour ago
- Hans India
S&P Global upgrades credit ratings on 10 Indian financial institutions
New Delhi: In yet another significant development, the S&P Global Ratings has upgraded long-term issuer credit ratings on seven Indian banks and three non-banking financial companies (NBFCs). The banks are State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, Union Bank of India, Indian Bank, and Kotak Mahindra Bank and the NBFCs are Bajaj Finance, Tata Capital and L&T Finance. The ratings of the 10 financial institutions have been upgraded from 'BBB-/Positive/A-3' to 'BBB/Stable/A-2'. The action comes after the global ratings agency raised sovereign credit rating on India. This marks the country's first sovereign upgrade by S&P in 18 years, the previous one being in 2007 when India was elevated to investment grade at BBB-. In May 2024, the agency revised its outlook on India from 'Stable' to 'Positive'. India's financial institutions will continue to benefit from the country's strong economic growth momentum, according to S&P Global. It expects India's banks to maintain adequate asset quality, good profitability, and enhanced capitalisation over the next 12-24 months. This is despite some pockets of stress. Along with raising the long-term issuer credit ratings of the 10 aforementioned financial institutions, S&P Global Ratings also revised upward its assessment of the stand-alone credit profiles (SACP) of seven of these entities – SBI, Axis Bank, Kotak Mahindra Bank, Union Bank of India, Indian Bank, Tata Capital and L&T Finance. The ratings on many Indian financial institutions are capped by our sovereign rating on India. This is due to the direct and indirect influence that the sovereign has on financial institutions operating in the country, S&P said. On Thursday, S&P Global Ratings had also raised credit ratings on Oil and Natural Gas Corp. Ltd. (ONGC), Power Grid Corp. of India Ltd., NTPC Ltd., and Tata Power Co. Ltd. to 'BBB' from 'BBB-' with outlooks as stable.
Hans India
2 hours ago
- Hans India
S&P further improves 10 FIs' ratings
New Delhi: S&P Global Ratings on Friday upgraded ratings of top 10 financial institutions, including SBI, HDFC Bank and Tata Capital, a day after the US-based agency raised India's sovereign credit rating. 'India's financial institutions will continue to ride the country's good economic growth momentum. These entities will benefit from their domestic focus and structural improvements in the system such as in the recovery of bad loans,' S&P said. S&P has raised long-term issuer credit ratings on seven Indian banks -- State Bank of India, ICICI Bank, HDFC Bank, Axis Bank Ltd, Kotak Mahindra Bank, Union Bank of India, and Indian Bank -- and three finance companies -- Bajaj Finance, Tata Capital, and L&T Finance. 'We expect India's banks to maintain adequate asset quality, good profitability, and enhanced capitalization over the next 12-24 months. This is despite some pockets of stress,' S&P said, adding, credit risk in the system has reduced. S&P had on Thursday upgraded India's credit rating to 'BBB', after a gap of over 18 years, as it expects India's sound economic fundamentals to underpin growth momentum over the next 2-3 years. It also said monetary policy settings have become increasingly conducive to managing inflationary expectations. The ratings on many Indian financial institutions are capped by our sovereign rating on India. This is due to the direct and indirect influence that the sovereign has on financial institutions operating in the country, S&P said. It also said that the insolvency and bankruptcy code (IBC) has improved the payment culture and rule of law in India. The code, introduced in 2016, has tilted the balance in favour of the creditors. It has also promoted a credit culture that encourages restructuring of going-concern entities. On Thursday, S&P Global Ratings had also raised credit ratings on Oil and Natural Gas Corp. Ltd. (ONGC), Power Grid Corp. of India Ltd., NTPC Ltd., and Tata Power Co. Ltd. to 'BBB' from 'BBB-'. The outlooks are stable. S&P Global Ratings also raised its long-term issuer credit ratings on the Export-Import Bank of India (India Exim) and Indian Railway Finance Corp.
