From 0 to Rs 1250 crore: Propelld’s meteoric rise in education financing

Education financing in India has been a tricky game, even for large financial institutions. Lack of credentials, credit history and high default rate have always been the challenges of the industry. However, many startups are trying to solve this problem through innovative product offerings, leveraging technology. Propelld is one such startup that provides student-friendly private study loans for learners pursuing education from partner institutions with customised loan products through a fully digital loan process. In a conversation with the Bizz Buzz, Brijesh Samantaray, co-founder of Propelld said the company has developed an underwriting platform which enables it to evaluate the credit worthiness of learners. With a default rate of less than 1 per cent, the company is planning to increase its disbursement in coming financial year. It has also received a NBFC license of its own, which will help it to secure funds from financial institutions apart from its current tie-ups with several of them. Though the landscape remains challenging for the growth of education financing owing to lack of awareness, the company is confident of meeting the critical need of financing of learners in coming days

What is the motivation behind setting up Propelld? Why did you enter financing the education space in India?

In the heart of Bharat, where the soil is imbued with the dreams of its youth, the spirit of Dr APJ Abdul Kalam's words echoes through the ages, inspiring generations to dream big, think big, and believe big. It's a land where the aspirations of young minds and the hopes of parents are intertwined with the vision of a brighter future, fuelled by quality education. The rising Gross Enrolment Ratio (GER) in higher education, from 25.8 per cent in 2019-20 to 27.1 per cent in 2020-21, is a testament to India's burgeoning aspiration.

However, the economic status of countless Indian families works as a barrier. With education costs soaring at twice the rate of inflation, at a staggering 12 per cent, many can’t realise their dreams. The $130 billion education market in India stands at a crossroads, serviced by traditional banks and financial institutions that, which is highly inadequate. With a mere 20 per cent penetration rate in the higher education loan market, the focus has predominantly been on funding aspirants with the means to study overseas, those from top-tier colleges, or individuals boasting desirable credit scores. Now, in a land where the majority are self-employed —farmers, shopkeepers, artisans, and more —proving one's financial stability through formal documents is a challenge.

This is where propelld steps in. We stand as a challenger to the status quo, armed with the belief that education is not merely an expense but an investment with an unparalleled return on investment (RoI). Understanding the potential of a student and an alternative method to gauge their family earning capacity should be the cornerstone of educational financing. For this education financing needs a specialised player. Propelld has embarked on a mission to ensure that quality education is accessible to all, regardless of their socioeconomic status. Propelld's innovative underwriting process is a testament to its commitment to inclusivity.

How has been your experience so far? The growth rate in the first three quarters of the ongoing financial year (FY24)? What are your expectations as far as FY25 is concerned?

Total estimated disbursal is around Rs 1250 crore so far. Moreover, Propelld is not only supporting the education infrastructure by partnering with institutes but also empowering individuals directly through its recent venture into B2C (business to consumers) services. Financial services are now delivered directly to customers, enabling them to achieve their educational dreams and transform their lives.

Our expectation for FY25 is also to crack the higher education market. Regarding students, we plan to transition towards more relationship-based offerings in the near future. This will involve assisting students in rating and reviewing courses and educational services, enabling them to make informed decisions and fostering better connections.

How many educational institutions have you tied up so far? Will you increase the portfolio of such partnerships in the coming years?

We have partnered with over 3,000 institutes right now. Yes, with our recent focus on higher education, we will be aiming to foster more strategic partnerships with institutes.

How many learners have received loans so far? What is their track record on repayment? How do you select a learner to be eligible for a loan?

We have given wings to the dreams of 2.5 lakh plus students and families. These profiles have shown a great repayment history as we have best-in-class NPAs of less than 1 per cent. Our underwriting system is unique. Propelld goes beyond traditional CIBIL scores to value students based on their learning capabilities and employment potential. We also cater to all income categories starting from a farmer to small shop owner. We can do it because we don't rely just on the formal income documents, we have alternate analyses to understand the income and repayment capability of individuals.

Which financial institutions you have tied up with? Will you apply for an NBFC license of your own?

We have already received our NBFC licence in July 2023. We are working with some of the largest lenders in the Indian financial ecosystem like Avanse, ABFL, JM Financials and two of them are AAA-rated lenders.

You are providing a repay later facility to learners who can repay after getting a job. Is this available to all learners or only students? What is the normal moratorium period?

We provide moratorium products only in our higher education segment that too, for selected portfolios.

What is the team size as of now? Are you planning to hire in the coming months?

The team size is around 300-400 at present. Yes, hiring is an ongoing process.

What kind of challenges do you face in growing the business of education loans in India?

Growing the business of education loans in India poses several challenges. Firstly, there's a pervasive lack of awareness among potential borrowers about the availability and advantages of education loans, necessitating extensive education efforts. Moreover, high default rates among borrowers due to employment challenges or financial difficulties can deter lenders from offering loans.

Additionally, stringent eligibility criteria, including the requirement for collateral or co-signers, can exclude many applicants, particularly those from low-income backgrounds. The escalating costs of education further complicate matters, as lenders struggle to offer loans that cover all expenses without burdening borrowers excessively. Regulatory hurdles and competition from government-sponsored schemes with more favourable terms add to the complexity. Evaluating the creditworthiness and future earning potential of student borrowers, especially those lacking credit history or stable income, presents another significant challenge. Overcoming these obstacles demands collaborative efforts from lenders, educational institutions, government bodies, and other stakeholders to devise innovative solutions that enhance accessibility and affordability for education loans in India. Having said this, Propelld is addressing most of the challenges and we are in the right direction to democratise access to education through financing.

This narrative is not just Propelld's story; it's the story of 2 lakh plus students and parents who dared to dream with Propelld, of every family that aspired for a better tomorrow, a better socio-economic status. Propelld invites you to be part of this journey, to share in the triumphs and challenges, and to witness the transformation of dreams into reality.