Anandakrishnan M R- The COO of Indian School Finance Co. Pvt. Ltd. Connected with The Global Hues to share the company’s growth.
Indian School Finance Company Pvt Ltd (ISFC) started its operations from Hyderabad in December 2008 as a Non-Banking Finance Company with major investment from Gray Matters Capital (GMC). ISFC is one of the longest-standing flagship investments in education carried out by GMC. The company has successfully expanded to various cities now. ISFC focuses on providing loans that can be used for the expansion of schools and the creation of infrastructure for affordable private schools, playschools, private degree, and vocational colleges, coaching centers, teachers, and SMEs catering goods and services to the education segment.
“We focus on improvement in quality of education. Our objective is to assist the Schools and other educational institutions in capacity building through infrastructure improvements, thereby enabling students to access quality education,” said Anandakrishnan.
Many educational institutions were facing challenges to get funding from the formal financial sector, as a result, the requirements were met either by borrowing from unorganized markets at a higher cost, or these projects were delayed or shelved till accumulations from internal accruals. Now with ISFC funding, these institutions can undertake their projects as planned without delays. The company is putting constant efforts and is widely appreciated. Indian School Finance Company is earning the confidence and trust of customers, lenders, and investors.
ISFC is a pioneer in the segment of financing education and infrastructure, and has existed for more than a decade providing loans to a specialized segment “educational institution”. The company has created a unique position with a strong brand value, a large customer base of more than 5000 schools, and a well-diversified pan-India network of 22 Branches in 13 states spread across the metro, tire-1 & 2 cities, and collection networks. ISFC is creating an impact on providing quality education for more than 35Lakh students indirectly.
Strategies to improve operational efficiency and enhance the customer experience
The company is going through a complete transformation from our earlier philosophy of transactional business model under ISFC Version-1 to relationship digital based business model under ISFC Version-2 to improve operational efficiency. To achieve this, the company has worked on the new retail products interest-free loans to parents which they can repay in EMIs and schools share a portion of their fees collections with the company.
“We anticipate by getting the entire Operations digitized, there will be huge savings in the operation cost and will pass on the reduction to schools by way of reduced interest,” explained Anandakrishnan. “Under Relationship Model ISFC plans to offer all financial solutions under one roof to their valued customers and ensure that all ISFC customers remain with ISFC forever”.
Impacts of Covid-19
Covid-19 has hit almost all the sectors and BFSI is among the worst-hit. ISFC funded schools have seen a drop in fee collection and they have put plans on hold to expand or improve the infrastructure. This is also resulting in some schools defaulting in repaying their loans. Indian School Finance used the current pandemic as an opportunity to transform their business model and relook at our complete business strategy to work on digitization, product innovations, methods of product delivery.
Their delinquencies, obviously, have gone high in this period. “We anticipate many schools will invest significantly in the coming academic year to augment the infra to reach out to the students effectively. This opens up new opportunities for financial institutions that lend to schools,” said Anandakrishnan.
Vision and Future Prospects
“We ended FY20 at a book size of Rs 389 crore. In the current financial year, we may see a contraction of around 15 percent. In the coming financial year, we see a growth revival and our lending is likely to grow by around 50 percent over the current fiscal year. In fact, we have already made plans of disbursing around Rs 300 crore,” said Anandakrishnan.
As an NBFC, Indian Finance School Pvt. Ltd. is in a very unique position with 2,500 active customers. The market opportunity is huge. Anandakrishnan believes India to be a credit-starved country with most sectors not receiving adequate credit flow. In the education segment, there are around 2.5 lakh unaided schools in the country.
If even 10 percent of these schools are served, then the opportunity is huge. However, due to the pandemic, some consolidation in the situation will happen. However, there is a likelihood of more specialized players emerging due to this consolidation, which will cater to specific segments.
Technology trends that will shape the BFSI segment going forward
The BFSI sector in general and banking in particular, are undergoing a technological churn right now. The reason behind this evolution is changing customer expectations and improved technological capabilities. The rising competition from Fin-tech start-ups that use technology to create unique customer experiences around banking and other financial services has forced the large BFSI to respond by innovating themselves.
BFSI’s digitalization and innovation initiatives will ensure a customer-centric perspective. To name a few technologies most of the BFSI started using regularly are AI, API Platforms, Robotic Process automation, instant payments, Smart Machines and Blockchain. The trend will keep rising in the coming years.
Awards and Milestones
- The first company in the world to exclusively fund education institutions.
- 22 Branches in 13 states spread across the metro, tire-1 & 2 cities, and collection networks.
Advice for upcoming entrepreneurs
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