Canada is the second largest destination among Indian students for overseas education. Among the preferred destinations for Indian students, countries such as the USA, Canada, the UK, Australia, and New Zealand stand out prominently.

Fuelled by the strong demand for overseas education among Indian students, specialised NBFCs have effectively established a niche in the overseas education loan segment. This preference is evident in the growing number of visa issuances to Indian students seeking to study in these countries.

According to the recently published report by CareEdge, titled ‘Canada Stir Unlikely to Hit Specialised Education Loan NBFCs Portfolio’, currently, Canada stands as the second-largest market in terms of regional exposure for education loans among specialised education loan NBFCs, second only to the USA.

The impetus for this growth is primarily attributed to the robust demand for education in Canada, which is further substantiated by the increasing number of student visa issuances to Indian students.

The trend of Canada’s student visa issuances to Indian students has been on the rise since 2015. Visa issuances to Indian students constituted 39.9% of the total student visa issuances to international students for CY2023 (till August 31, 2023).

There has been a significant surge in the demand for pursuing overseas education among Indian students. They are enticed by the wider variety of courses, research options, and skill-based training opportunities available in comparison to the domestic education system. Moreover, the allure of enhanced post-study career prospects further motivates Indian students to seek education abroad.

In line with the prevailing trend of academic enrollments, the aggregate AUM of the retail education loan portfolio of CARE Ratings-rated NBFCs for students pursuing education in Canada, demonstrated a remarkable Compounded Annual Growth Rate (CAGR) of 77.5% from March 31, 2021, to June 30, 2023.

The outstanding AUM reached Rs. 5,183 crore, significantly up from its standing at Rs. 1,426 crore on March 31, 2021. This amount constitutes 19.8% of the overall AUM of NBFCs as of June 30, 2023. It may be noted that specialised education loan NBFCs predominantly finance postgraduate courses which have a typical academic duration of two years.

CARE Ratings anticipates that the growth momentum for these NBFCs will persist, as students are more likely to seek alternative destinations for their education rather than postpone their academic pursuits.