In conversation with V.L. Ramakrishnan, CEO and Co-founder of Shiksha Finance
What new technology has come up since the last year in the education sector?
Big Data, Machine Learning, and the Internet of Things (IoT) were the biggest educational technology trends of 2019. However, distance learning has become the one trend that rules them all. The COVID-19 pandemic has drastically changed the way we teach and learn. Students now have to get used to distance learning via digital platforms due to social distancing. Even though some schools are reopening, this trend may continue until 2021.
What are the challenges you are facing since Covid?
The nationwide lockdown in India had adversely impacted our customers who own and operate schools, and parents from low-income backgrounds, due to closure of schools and reduced incomes. Our disbursements were subdued during this period.
We launched new short term loan products for our existing school and student loan customers. These short-term loan products were designed to provide assistance to our customers and help them overcome the challenges from impaired incomes and cash flows due to COVID-19 disruptions.
What are your expansion plans?
Shiksha started operations in Tamil Nadu and we are now present in Pondicherry, Telangana, Andhra Pradesh, Karnataka, Maharashtra, and Tamil Nadu, operating out of 38 branches. We plan to deepen our presence in the existing geographies and intend to expand to three other states in the next 18 to 24 months.
What is the current loan book size and the way forward in 2021?
Since Zephyr Peacock’s investment in FY19, we have grown our loan book by 70% to INR 1.8 billion as of March 2020. We have disbursed loans worth over INR 3.5 billion to serve the needs of low-cost private schools and students from low-income backgrounds. Shiksha expects to disburse loans worth INR 7.5 billion in the next 24 to 30 months.
What is the impact of the NEP on education financing?
The Policy commits to significantly raising educational investment, as there is no better investment towards a society’s future than the high-quality education of our young people.
Impact on School Financing
As education shifts to digital mediums, schools, colleges, and other educational institutes will increasingly require financing to improve their digital infrastructure. In recent years, many NBFCs and private financing companies apart from banks have emerged to offer infrastructure loans for schools, colleges and institutes providing vocational and professional courses.
Financial support will be provided to various critical elements and components of education, such as decent and pleasant service conditions at schools. Adequate and safe infrastructure, computing devices, internet, libraries, and sports and recreational resources will be provided to all schools to ensure that teachers and students, including children of all genders and children with disabilities, receive a safe, inclusive, and effective learning environment and are comfortable and inspired to teach and learn in their schools.
Impact on Student Financing
The cost of higher education is increasing gradually, and aspirants search for good options to avail education loans. These students serve as an attractive target market for financial services providers. Financial service companies have the opportunity to collaborate with the National Scholarship Portal to support students receiving scholarships. These companies can also partner with educational institutions to offer loans and financial support to the students enrolled in such institutions.
Increased focus on vocational education in NEP 2020 would also result in the need for financing the fees of such vocational courses. Additionally, the increased technology adoption that the NEP 2020 would bring about in areas of online learning, e-program delivery, teacher training or e-assessments will serve as a challenge for low-income students in terms of affordability, access to devices and internet. Such students would require financing, not only for their tuition fees but also for the equipment and supplies required for their education.
The Government of India will constitute a ‘Gender-Inclusion Fund’ to build the nation’s capacity to provide equitable quality education for all girls as well as transgender students. This will help in gaining access to sanitation and toilets, bicycles, conditional cash transfers, special hostels in dedicated regions, bridge courses, and financial assistance through fee waivers and scholarships etc. to be offered under National Education Policy 2020