Key Points

The pace is likely to halve this fiscal as disbursements for pursuing educational courses in the US decelerate following a raft of policy changes in that country, according to the report by Crisil Rating.

To mitigate the impact, NBFCs are diversifying into new geographies and product adjacencies. While non-performing assets (NPAs) have remained stable so far, asset quality will be monitorable given the global uncertainties and a large proportion of AUM (85) remaining under contractual principal moratorium, the report mentioned.

The education loan AUM of NBFCs grew a rapid 48 per cent to Rs 64,000 crore last fiscal. That followed an even faster 77 per cent growth in fiscal 2024.

“Policy uncertainties in the US, combined with measures including reduced visa appointments and the proposed elimination of Optional Practical Training norms have culled newer loan originations. This has led to a 30 per cent decline in total disbursements to that geography last fiscal,” said Malvika Bhotika, Director, Crisil Ratings.

Disbursements linked to even Canada, the second-largest market, fell as student visa rules turned stricter, including increased financial requirements via proof of available funds, and cap on permits.

“Consequently, overall education loan disbursements were up only 8 per cent in fiscal 2025, compared with 50 per cent in fiscal 2024, Bhotika mentioned.

To offset these headwinds, NBFCs have sharpened focus on other geographies.

Disbursements linked to courses in the UK, Germany, Ireland and smaller countries have doubled in the past fiscal as students opted for alternative destinations.

The share of such geographies in total disbursements rose to almost 50 per cent in fiscal 2025 from 25 per cent a year ago.

NBFCs are also looking at domestic student loans and adjacencies such as school funding, loans for skill development, certification and coaching. Given the lower ticket sizes of such loans, their share in the overall portfolio is unlikely to be material, but they may lend some stability in times of global uncertainties.

“The ability of NBFCs to scale up and maintain asset quality in some of the newer domestic products will bear watching as well,” said Sonica Gupta, Associate Director, Crisil Ratings. Moreover, the agility of the NBFCs to navigate the complexities of the global landscape, characterised by uncertainty and change in preferences of students, will be crucial for sustained growth and success.

—IANS

- IANS