Shiksha Finance, a non-banking financial company focused on the education sector, has attracted an investment of ₹55 crore from Zephyr Peacock. Shiksha provides loans to affordable private schools and parents of students from low-income families to meet tuition fee expenses.
The company has financed over 3,500 private schools and has financed about 1 lakh parents for their children’s education.
The company now operates in five States, with over 300 employees covering over 1,000 km across 40 branches.
Traditional banks and other NBFCs are not designed to underwrite the customer segment that Shiksha serves since they lack the specialised underwriting processes. It has developed a unique underwriting process to be able to lend to APS, said Shiksha.
The NBFC provides loans to APS for financing capital expenditures for setting up libraries and science labs, the purchase of computers, the expansion of school buildings, and working capital.
VL Ramakrishnan, CEO and co-founder of Shiksha Finance, said larger banks, or NBFCs, do not lend to students from low-income families who struggle to meet the upfront payment for tuition fees.
Responding to pandemic challenges, the company aligned its business synergies with available market opportunities to diversify its operations and ventured into two new business lines, Business Correspondence Services and Loan Against Property, he said.
Shiksha entered into an agreement with Federal Bank to carry out business correspondence services in January 2022. The BC arrangement has resulted in the creation of a quality book exceeding ₹60 crore, with collection efficiencies reaching 99.8 per cent every month. The BC business is poised to grow 2.5 times and reach ₹125 crore by next March, he said.
The fully secured loan against property in March has a portfolio of over ₹12 crore and aims to cross ₹50 crore by FY24-end.
Under the BC partnership model, Shiksha can go back to its existing clients and lend on behalf of Federal Bank.