PhysicsWallah Reverses Course On Student Lending; Shares Surge Nearly 18%

Edtech major PhysicsWallah has rolled back its plan to provide financing to students through its wholly owned NBFC subsidiary, FinZ Finance.

In a statement today, the Alakh Pandey-led company said it is restructuring its lending strategy and has tied up with multiple leading regulated third-party NBFCs to enable student lending needs.

“This decision reverses the company’s earlier approach and is intended to materially reduce balance sheet and credit related risks for the company,” the company said.

Notably, the company’s shares were under pressure since it announced its decision to infuse ₹120 Cr into FinZ Finance last week. Following the announcement today, the company’s shares surged as much as 17.8% to touch an intraday high of ₹108.45 on the BSE.

The decision to enter student financing had raised concerns among shareholders due to the edtech sector’s troubled history with the segment. Earlier this week, Inc42 reported in detail about the challenges which PhysicsWallah will face by lending from its own books, with the biggest among them being keeping lending discipline and regulatory risks in check.

“We received feedback from our partners that our core strength lies in building communities and our online business. Our lending business is best left to regulated third-party NBFCs who have created robust underwriting capabilities,” PhysicsWallah cofounder Prateek Maheshwari said on the change in the company’s plans.

(The story will be updated soon)

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