By Abhay Ray 
Introduction
Bengaluru, Varthana, a non-banking finance company (NBFC) that focuses on providing support to affordable private schools across India, has, however, secured ₹159 crore in debt funding. Funds have been raised via External Commercial Borrowing (ECB) and Non-Convertible Debentures (NCDs), two types of financing instruments commonly used by companies to procure loans.
About Varthana
Varthana was co-founded in 2013 by Steve Hardgrave and Brajesh Mishra, and different types of loans are offered by the organization:
- School loans for construction, equipment purchase and expanding classrooms
- Student loans for higher education, vocational training and skill-based courses
- Teacher training loans that can help develop teacher quality and teacher leadership
- Varthana is focused on affordable private schools that serve families from low-income backgrounds. These schools, despite being high quality, often struggle to access bank loans. Varthana seeks to fill this gap.
According to Varthana, its achievements to date include:
- Supporting over 12,000 affordable private schools
- Disbursing over 19,000 school loans
- Establishing a presence in 16 states and union territories
- Opening 40 branches to support its operations across India
Leadership Comment
Steve Hardgrave, CEO of Varthana, said:
“Varthana is pleased to partner with Blue Earth Capital, Franklin Templeton AIF, and ResponsAbility in our efforts to drive impactful change in the education sector and make quality education accessible to all across India”.
Challenges of Affordable Education
As Hardgrave found out during his conversations, there are private schools in India that charge as little as $5 per month. Despite their lower fees, these private schools strive to maintain standards by adopting modern teaching methods, incorporating technology in classrooms, and focusing on extracurricular activities. The owners of these schools had set up schools with their own resources and property but struggled to secure financing for expansion.
“Most banks avoid underwriting loans for such schools due to preconceived notions about their creditworthiness and the challenges involved in the underwriting process,” Hardgrave explains. “In India, schools are often classified as trusts or societies by law, which means their governance structures are not as robust as those of companies,” he says.
“Consequently, many banks and financial institutions prefer to steer clear of this sector.” To solidify investors’ trust in the payback guarantee, Varthana takes the key entrepreneur as a co-applicant on the loan, along with some trustees or society members to ensure governance and accountability. For underwriting, however, Varthana cannot rely on bank statements and CIBIL track records alone as these are not audited financials; nor income tax returns, since these are not subject to tax.
“The crucial thing is knowing how to walk into the school office and ask for the right kinds of records, which are often kept in a spiral notebook or, you know, ledgers and fee receipt books,” Hardgrave says. The company will also visit the school in person to verify the number of students it has. “This is where a lot of the secret sauce and kind of savvy comes in—you know how to correctly underwrite the schools. And that’s the kind of thing where, as you do more and more, you learn all these little tiny lessons, and you get better and better at it,” he adds.
Varthana’s Impact
Many of the schools that Varthana extends loans to provide education to children whose parents are farmers, daily wage labourers, auto-rickshaw drivers, and other workers from low-income backgrounds. The company has a wide portfolio of 11,000 schools in 14 states, and supports them at various stages.Typically, Varthana engages with schools that have been operating for about five years and have around 300-400 students. Often, these schools might initially take small unsecured loans for minor renovations.
The average loan size is ₹35 lakh, but the range can be as low as ₹5 lakh and as high as ₹10 crore for much larger mature schools. Among Varthana’s success stories is Sristi Global School, established as a preschool 13 years ago, which now offers classes from Nursery to 7th standard. The school follows the State Board syllabus and plans to adopt the CBSE syllabus soon.
Varthana has supported the school since 2014 and had initially offered an unsecured loan of ₹5 lakh, followed by ₹10 lakh in 2022, and ₹1.73 crore in 2023 for infrastructure development. These funds have enabled the school to build additional classrooms and expand to three campuses in Bengaluru.
Over 11 years, Varthana has often provided multiple loans to the same schools, helping them expand from 300 students to as many as 2,000-3,000 students. During the COVID-19 pandemic, Varthana distinguished itself from other lenders by offering substantial academic support. Their education department, staffed with specialists, provided learning packets for schools unable to transition to digital formats and offered digital content access to customers.
Conclusion
Varthana’s ₹159 crore funding marks a significant step in its mission to empower affordable private schools across India. By tailoring financial solutions to schools often overlooked by traditional banks, Varthana bridges a critical gap in educational access for low-income communities. Its hands-on underwriting, deep sector understanding, and ongoing academic support—especially during crises like COVID-19—demonstrate a strong commitment to both financial inclusion and educational equity. With over 19,000 loans disbursed and operations across 16 states, Varthana continues to drive meaningful change in India’s education landscape.
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