Shiksha Finance aims to fund more students to prevent drop-outs

Shiksha Finance, a Chennai-based school financing start-up, will open more branches in smaller towns in a bid to further reduce school dropout rate.

“During 2015-16, we provided education loans to 600 students and financed 240 educational institutions for asset and infrastructure creation. This year, we have set aside Rs.3.5 crore for this activity against Rs.1 crore provided last year. Besides, we are strengthening our technology backbone to scale up student education loan model,” said V.L. Ramakrishnan, Shiksha Finance, Director and CEO.

“Over the next few months, we have plans to cover entire Tamil Nadu by opening five more branches. Soon, we will be entering Karnataka and opening more branches in Andhra Pradesh. For the next 12-14 months, we will be focused on providing education loans to students and later expand it to other areas. Currently, we have 30 staffers and this will be doubled. We will be achieving break even by February 2017,” Mr. Ramakrishnan said.

Jacob Abraham, Shiksha Finance Director and Chief Operating Officer said they were building a new psychometry-based business model to assess the financial status of their no-income customers as the cannot furnish bank statement or Cibil score to avail loans. “Through the new method, we can easily find out, whether one has the ability or intent to pay back the education loan. Besides, the loans approval time will be cut from 24 hours to two hours,” Mr. Abraham said.

Started by Mr. Ramakrishnan and Mr. Abraham with seven staffers about 18 months back, Shiksha Finance provides loans to middle and lower income families that find it difficult to fund their children’s education from kindergarten to class XII. These loans are secured through a unique social collateral that can be paid back through a manageable repayment schedule.

Mr. Abraham said the average ticket size of education loan was about Rs.15,000 while loans to educational institutions ranged between Rs.10 lakh and Rs.1.5 crore. “After the infrastructure expansion, the student enrolments in these institutions have increased and drop-outs have also reduced,” he claimed.