Indian students will no longer have to spend additional money due to the conversion of the rupee to the dollar. They can soon avail of foreign currency-denominated education loans from the International Financial Services Centre (IFSC) at GIFT City. IFSC Authority has permitted an education loan company – Avanse – to start operations and provide education loans in dollars.
Currently, students must convert rupees to dollars to pay fees at foreign universities. The loan disbursement will be in the dollar and will save conversion costs. Also, it will be at competitive interest rates offered in the international market. IFSCA will have more such companies in the future and will help Indian students avail dollar loans.
Sources said the company would start operations soon with loan offerings in US dollars. The currencies of other countries will be added eventually. Currently, financial companies based in other countries offer foreign currency loans to Indian students studying in their countries.
However, a section believes that a rupee loan is more beneficial. According to experts, students must consider the possibility of the rupee weakening against the dollar, making repaying the loan challenging.
While the education loan in dollars from an international institution may look attractive because of lower rates than a rupee loan from a domestic institution, the actual rate at which the borrower will pay is the sum of quoted interest rate and the annual depreciation of the rupee, said experts.