NEW DELHI, Oct 31: The recent clarifications by the United States on the applicability of H-1B visa petitions for foreign nationals have partly alleviated concerns about the asset quality of the education loan portfolios on non-Banking Finance Companies (NBFCs), said a CRISIL report today.
The US clarification is that the new, increased one-time fee applies only to foreign nationals outside the US. Further, it applies only to new H-1B petitions filed and not to transition from one type of visa to another, such as from F-1 to H-1B.
It brings relief to education-loan-focused NBFCs and other evolving policy uncertainties in the US that require close monitoring.
A key policy under scrutiny is the Optional Practical Training (OPT) programme. The restriction and elimination of this programme altogether could exert substantial pressure on the education loans as students may struggle to secure employment and repay their loans as previously anticipated.
The Credit Rating Information Services of India Limited (CRISIL) said that, nevertheless, the evolving and uncertain policy environment for foreign workers has already made the US, the largest market for higher education, a less attractive destination which will lead to slower education loan growth for NBFCs.
Malvika Bhotika, Director of CRISIL Ratings, said, “The recent clarification indicates that the increased H-1B visa fee does not apply to students who are already in the US. Additionally, these students can still work in the US for up to three years on an F-1 visa after completing their course under the Optional Practical Training (OPT) program. This significantly mitigates concerns over future employability of these students and allays asset quality fears over existing loan portfolios of NBFCs in the education loan sector.”
The rating agency said that around 85pc of the overall loan portfolio is under contractual moratorium where Equated Monthly Instalments (EMIs) payments have not yet commenced. Specifically, for the US-linked portfolio, it’s estimated that around one-third of the portfolio will be EMI paying by the end of fiscal 2026.
Sonica Gupta, Associate Director of CRISIL Ratings, said, ” Given the significant size of education loan market linked to the US, a slowdown here cannot be entirely offset by growth in other geographies, including the domestic market. Consequently, growth in loan books for education loans of NBFCs is expected to remain modest at 10-15pc this fiscal, lower than our earlier expectation, and well below the 48pc and 77pc growth in fiscals 2025 and 2024, respectively.”
The ability of NBFCs to maintain asset quality in their education loan portfolios amid the evolving US policy landscape warrants close monitoring. Moreover, as they expand into newer geographies, they will need to invest substantially in building robust databases and underwriting capabilities to ensure that asset quality is sustained, the CRISIL said.
(UNI)
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