NBFC Education Loans in India: A Complete Guide for Study Abroad Aspirants

For Indian students dreaming of studying abroad, financing their education is usually a major challenge. Banks offer education loans, but not everybody meets the eligibility criteria. This is where Non-Banking Financial Companies (NBFCs) come into play. They provide education loans at relaxed terms and conditions, thus helping students achieve their academic goals. In this blog, we will explore everything about NBFCs, their role in student financing, and how they differ from traditional banks.

What are Non-Banking Financial Companies?

NBFC is a financial institution that provides banking services but does not function like usual banks. NBFCs offer loans, credit facilities, insurance, and investment services but cannot accept demand deposits like savings or current accounts. They are regulated by the Reserve Bank of India (RBI) which ensures that they function properly and do not exploit customers. NBFCs play a crucial role in providing financial assistance to individuals, businesses, and students who need funds for higher education.

What are the Differences Between Banks and NBFCs?

NBFCs and banks may seem similar, but they have distinct differences. Let us understand the differences between banks and NBFCs from the table below:

Functions of Non-Banking Financial Companies

Now, let us understand the various functions of NBFCs:

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  Providing loans and financial assistance: They offer personal loans, education loans, business loans, and more.

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  Asset financing: They help individuals purchase assets like vehicles, machinery, and equipment.

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  Investment services: Many NBFCs provide investment options like mutual funds and bonds.

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  Insurance services: Some NBFCs offer insurance services like health insurance, life insurance and more.

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  Wealth management: NBFCs also assist in managing finances and providing financial planning services.

For students who cannot take education loans with collateral or do not meet the criteria of public or private banks, can always request NBFCs for their educational financing.

Types of NBFCs in India

NBFCs are divided into various categories based on the type of financial assistance they are giving. Let us understand the types of non banking financial institutions:

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  Asset finance companies (AFCs): Provide loans for assets like vehicles, machinery, or equipment. For example: Bajaj Finance, Muthoot Finance and more.

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  Loan companies (LCs): Offers loans for personal, educational, and business purposes. For example GyanDhan, Avanse, Credila and more

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  Investment companies (ICs): These NBFCs deal in securities, bonds, and stocks.

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  Infrastructure finance companies (IFCs): Non-banking financial companies that fund large infrastructure projects come under this category.

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  Microfinance institutions (MFIs): NBFCs that offer small loans to individuals and businesses, including students come under this category. GyanDhan also offers skill development loans at very low interest rates.

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  Housing finance companies (HFCs): NBFCs that provide home loans are categorized as HFCs.

For students planning to study abroad, LCs and MFIs are the most useful as they offer flexible education loans. Now let us see a list NBFCs in India.

RBI List of NBFC in India

The RBI maintains NBFC list so as to make sure there are no frauds associated with loans and people can trust them for their educational loan requirements. Some popular NBFC registered with RBI that offer education loans include:

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  Credila
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  Avanse Financial Services
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  InCred
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  Auxilo
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  MPOWER Financing
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  Tata Capital
• 
  GyanDhan

Always check if an NBFC is on RBI list of NBFC before applying for an education loan to avoid fraud. Look for trusted names and read customer reviews before making a decision.

Role of NBFCs in Education Loans

NBFCs have made studying abroad easier for thousands of Indian students by offering loans with minimal paperwork, competitive interest rates, and flexible repayment options. Let us understand their role in education loans in detail:

Education Loans Without Collateral:

Unlike public banks, which usually require collateral for higher education loans, NBFCs provide unsecured loans to students who do not have assets to pledge. This makes it easier for students from middle-class backgrounds to study abroad.

Higher Loan Amounts:

Many NBFCs offer loan amounts higher than traditional banks, sometimes covering all the expenses including the entire cost of education, including tuition fees, living expenses, travel, and other costs.

Faster Loan Processing:

NBFCs process education loans much faster than banks. While banks may take weeks to approve a loan, NBFCs can approve loans within days, which is important for students facing tight admission deadlines.

Flexible Repayment Options:

NBFCs provide flexible repayment options. Here are some of the flexibility options provided by NBFCs:

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  Moratorium periods (no repayment during the course)
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  EMI customization based on future income
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  Step-up repayment plans (low EMIs initially, increasing over time)

Wider Eligibility Criteria:

NBFCs are more lenient when it comes to eligibility criteria. Even students with a low CIBIL score can get an education loan if they have strong academic records or have got an admission to a reputed foreign university. Please note that education loan approval varies from lender to lender and interest rates may be higher for students with low credit scores.

Comparison of NBFCs in India that Offer Education Loans

Let us see and compare various NBFCs in India that offer education loans for abroad and for India from the table below: 

Please note that interest rates and loan terms may vary based on individual profiles and lender policies. We recommend that you apply loan through GyanDhan for best rates and terms on your education loan.

How to Apply for an Education Loan Through NBFCs?

With GyanDhan, applying for your education loan is simple, straight forward and transparent. Here is how you can apply for an education loan through GyanDhan:

Step 1: Check Loan Eligibility:

All you need to do is check your loan eligibility on GyanDhan’s official website.

Step 2: Compare Loan Offers:

Once you are done with the form, hit the submit button. That is it! One of our education loan experts will get in touch with you. Best loan offers will be recommended to you based on your profile.

Step 3: Submit Your Documents:

Based on your preferred lenders, a customized document checklist will be provided. You can either upload the documents or we can get them picked up from your doorstep if you reside in tier-1 cities.

Step 4: Live Tracking and Faster Processing:

We will apply for an education loan on your behalf and you can live track your application status on your dashboard. 

Step 5: Loan Disbursement:

Once approved, the loan is directly disbursed to your university or account as per the chosen lender’s terms.

For Indian students aspiring to study abroad, NBFCs provide a valuable financial solution when banks may not be an option. With faster processing, flexible terms, and customized education loans, NBFCs help make higher education accessible to a large number of students. If you are planning to pursue your dreams of studying overseas, GyanDhan can be a one-stop solution for securing the best education loan options. We have partnered with multiple NBFCs, public banks, and private banks to offer the best education loan rates, ensuring transparency and competitive interest rates.

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