Fintech startup ‘GyanDhan’ has disbursed Rs 800 Cr in ‘study abroad’ loans

Education might be precious, however, it includes some significant pitfalls. Particularly in a developing nation like India, where a large number of students can’t bear the cost of advanced education.

As per industry estimates, India’s gross enrollment ratio (GER) in colleges is only 25-27 percent. This means only one-fourth of those who complete school go on to get a college degree.

It gets worse at the post-graduation level. On the contrary, GERs of developed countries like the US, the UK, and China are at 50-70 percent. The major reason for this is the lack of finance at the students’ disposal and/or limited access to external credit.

GyanDhan works towards solving this very issue.

The Delhi-based startup, which began operations in 2016, was born after its founder Ankit Mehra witnessed the education financing problem from close quarters during his MBA degree at Spain’s IESE Business School.

“I was lucky enough to get a loan myself, but the bank IESE had tied up with was going back on its commitments to fund non-Europeans. And I saw a lot of students from India struggling to get a loan,” he tells.

Moreover, even those who managed to get the loan could cover only about one-fifth of the entire cost of the course.

“Public and private banks lend just Rs 20 lakh when you need about a crore to cover the entire course. Some NBFCs give bigger loans with collaterals, but even that isn’t enough,” Ankit reveals.

In 2015, Ankit returned to India, and along with fellow IIT alumnus, Jainesh Sinha founded GyanDhan. Sinha is now the Co-founder and COO of the company.

GyanDhan is primarily an education financing marketplace that partners with a variety of lenders — from banks and NBFCs to even individuals — to fund the students of their choice, either through loans or scholarships.

To evaluate students’ loan eligibility, the startup has built a proprietary risk scoring model known as the GyanDhan Score. It evaluates the financial and academic data of students and predicts their future employability to assign them a credit score.

Co-founder and CEO Ankit explains, “Educational loans should look at the future employability of a candidate, and see whether graduating salaries are commensurate with the cost of education. Loan eligibility cannot be based only on how much property their family owns. It must be on par with their ability, the course they’re pursuing, the average salaries and job opportunities in that sector, and so on. We spent our first year building tech just to solve this.”

Once the GyanDhan Score model was in place, the company went about improving the supply side, which is the loan providers. GyanDhan collaborated with Axis Bank to activate its ‘study abroad loans’ category, and distributed the first loan in May 2016.

Since then, it has partnered with a mix of PSUs (SBI and Bank of Baroda), private banks (ICICI Bank), education-focused NBFCs (Auxilio, InCred, Avanse Financial, Credila), and international lenders (MPower Finance, Prodigy) on its loan marketplace.

“We keep the number of loan partners low so we can focus on the depth of offering,” says the founder.

The company is currently recruiting fresh talent into its team. Inquiries about job openings can be made by dropping a mail at ankit.mehra@gyandhan.com.