NBFCs are leaving an increasingly perceptible mark on India’s lending landscape, keeping pace with the country’s evolving regulations and catering to a wider segment of borrowers. By combining technology-forward frameworks with sophisticated underwriting models, NBFCs have historically set themselves apart from traditional banks. NBFCs like Poonawalla Fincorp are democratising education financing at scale by shifting the focus from collateral to potential, accounting for swift risk assessment while enabling education finance.
The gaps in India’s lending ecosystem
India’s traditional lending ecosystem has been built largely around banks, with systems and processes designed for secured, collateral-backed and salary-based borrowers. This traditional approach, focused on risk minimisation, inadvertently leaves clear white spaces in education finance and excludes a wide group of borrowers: first-generation learners, students from modest backgrounds, and those without family assets to pledge.
Without a credit history, regular income, or strong collateral, students typically have a limited risk appetite. Their choices have traditionally been confined to one-size-fits-all education loan products that don’t take into consideration the diversity of institutions, courses, and career paths. Finally, there are the many branch visits, physical paperwork, and unpredictable turnaround times – all risking delayed admissions and fee payments.
This trifecta is what NBFCs address, offering tailored products, broader repayment assessments, flexible repayment solutions, and a digital-first approach to offer unparalleled convenience. The figures speak for themselves: education loans have been the fastest-growing asset class for NBFCs, reaching over 50% AUM growth over the past few years.
NBFCs occupying the white space in education funding through digitisation
From our perspective, the objective is clear: enable deserving students to access quality education – in India or overseas – through a transparent, digitally powered education loan process. Digitisation is at the core of this process, keeping things online, paper-light and intuitive.
Students and parents can initiate the education loan request digitally, upload documents online, and track the status without repeatedly visiting a branch. Free online tools like the education loan calculator enable borrowers to estimate EMIs, understand affordability, and get a sense of their education loan eligibility before proceeding. Clearly listed digital document requirements reduce back-and-forth, while SMS, email and app-based updates keep students and co-applicants informed of each step.
The objective is clear: enable deserving students to access quality education – in India or overseas – through a transparent, digitally powered education loan process
Beyond collateral with technology-forward underwriting
Trusted NBFCs employ API-driven information fetching to instantly verify income, academic credentials, credit bureau data and a borrower’s KYC details, all without requiring any physically submitted documents for manual verification. This real-time data integration combines speed with accuracy, helping us provide near-instant approvals while maintaining rigorous risk controls and compliance.
A three-pronged repayment assessment framework
Where traditional lenders apply single, often binary tests of assessing repayment capacity, NBFCs evaluate student borrowers across forward-looking, education-specific scoring frameworks that place meaningful weight on the student’s future potential.
Future-income scoring evaluates a student’s projected earning potential after completing the course. By analysing industry salary data, job placement statistics, demand trends in the industry and course-specific career trajectories, we can estimate the expected future ability to repay, instead of only relying on current family income. A student pursuing software engineering at a tier-1 institution demonstrates different repayment capacity than one in an emerging field – and the framework recognises this distinction.
University scoring integrates university rankings and reputational data into the assessment, effectively using institutional quality as a proxy for student success probability. A range of factors are considered, including global or national reputation and ranking, accreditation status, historical placement track record and tie-ups with industry and employers.
Finally, program-quality scoring focuses on the specific course or program, examining industry relevance, program-specific placement rates, typical salary ranges for graduates, and global or national demand for the skills being taught. Combined, these three scoring mechanisms create a multidimensional risk profile, prioritising a borrower-centric approach.
Speed, efficiency & convenience at scale
NBFCs also recognise that lending in India still benefits from a balanced, “phygital” approach – a mix of digital and physical. Whether for their peace of mind or for application-specific requirements, a strong network of physical branches across India means our customers are a short distance away from in-person interactions and clarifications. In the background, our digital frameworks remain hard at work.
This combination of digitisation, API-driven verification, and intelligent underwriting produces a system that operates at scale without sacrificing quality. It helps us move away from purely collateral-heavy models while still maintaining compliance and quality assessments. As the country’s education ambitions grow, NBFCs like Poonawalla Fincorp remain committed to leveraging technology and thoughtful underwriting to help bridge the funding gap – so that deserving students can focus on their studies and careers, while we help take care of the financing.
About the author: Poonawalla Fincorp is a leading NBFC in India, offering digital-first lending solutions built on transparency, governance, and a customer-centric approach. The company focuses on enabling responsible access to credit for individuals and businesses across India.
