Forex, or foreign exchange, is the process of converting one currency into another for various reasons, such as trade, tourism, and investment. In the case of Credila, a subsidiary of HDFC Ltd. and India’s first dedicated education loan company, forex is done on behalf of its customers who are looking to study abroad.
Credila offers education loans to Indian students who wish to pursue higher education in foreign countries. These loans cover a wide range of expenses, including tuition fees, living expenses, travel expenses, and even exam fees. However, since these expenses are denominated in foreign currencies, Credila needs to convert the loan amount into the relevant currency to disburse it to the student or the institution.
To do this, Credila works with authorized forex dealers who specialize in currency exchange. These dealers are licensed by the Reserve Bank of India (RBI) and are authorized to buy and sell foreign currencies on behalf of individuals and organizations. Credila selects its forex dealers based on their reputation, reliability, and competitive rates.
Once Credila approves a loan application, it calculates the loan amount in the relevant foreign currency based on the prevailing exchange rate. For example, if a student is applying for a loan of $50,000 to study in the US, and the current exchange rate is 1 USD = 75 INR, then the loan amount in INR would be 3,750,000. Credila then instructs its forex dealer to purchase the equivalent amount of dollars in exchange for INR.
The forex dealer then transfers the dollars to the designated bank account of the student or the institution, depending on the loan agreement. Credila also ensures that the exchange rate is locked in for the entire loan tenure, so that the student or the institution does not face any currency fluctuations during the repayment period.
In addition to converting loan amounts, forex is also done for other purposes related to education loans. For example, if a student needs to pay an exam fee in a foreign currency, Credila can arrange for the conversion of the required amount. Similarly, if a student needs to transfer funds to a foreign bank account, Credila can facilitate the forex transaction.
Overall, forex is an integral part of Credila’s operations, as it enables the company to provide education loans to students who wish to study abroad. By working with authorized forex dealers and locking in exchange rates, Credila ensures that its customers receive the required funds in the right currency, without any unexpected surprises.
