HDFC's education loan arm to offer forex, insurance services

Credila Financial Services Ltd, the education-loan unit of mortgage lender Housing Development Finance Corporation (HDFC), plans to start offering foreign exchange services and insurance products in order to create additional revenue streams, people familiar with the matter said on Monday.

The Reserve Bank of India (RBI) has recently granted a licence to Credila to act as a full-fledged money changer, the people said. The license will allow Credila to act as a money changer for international currencies, they said.

The company also plans to start acting as a distributor and broker for HDFC Standard Life Insurance Company to sell life insurance products. The plan is to tie up with more players in the insurance sector and also extend it to general and health insurance. The services are synergistic in nature as the core customers of education loans are students. "The idea is to catch them young," says an HDFC official, who does not wish to be named.

HDFC has a majority stake in Credila, which commenced its operations in March 2008. Credila is a non-banking finance company focused on education loans. The company is part of HDFC's education vertical, which also includes primary education and skill development initiatives.

The education loan market in India is estimated to be about Rs 43,000 crore. There are an estimated 14 million students in India's higher education sector, and about 200,000 students opt for studying abroad. This offers a good opportunity to provide foreign exchange services as well as life and general insurance. The idea is to sell multiple products to a single customer.