Housing development and Finance Corporation, better known as HDFC has entered into the education loan segment by announcing its plan to purchase a 41 percent stake in education loan provider Credila Financial Services.

HDFC is buying this stake from DSP Merill Lynch Capital Ltd, the Indian arm of global financial services firm Merill Lynch.

Since HDFC is registered as a housing finance company, it deals mostly in housing finance. HDFC provides a small amount of general financinf in the form of top-up loans to its customers. Besides, there is no specialised lending toward education.

V S Rangan, Senior General Manager, HDFC said that the investment was small, less than Rs. 10 crore and it would help the company to enter the fast growing market..

Rangan added, "Education loans provide a large business opportunity in the country with more and more people going for higher studies."

Further, the Senior Manager pointed out that the education loan market was growing continuously at the rate of 25-30 percent every year and was estimated over Rs. 30,000 crore.

He revealed that the company would disburse loans for studies both in India and Overseas. The deal has to adhere to certain norms.

Lately, large Indian businesses have entered into education sector since they eye a huge potential in the sector. Private equity investors have also invested in certain entities in the sector hoping that it would be a good bet.