PhysicsWallah dumped its plan to lend ₹120 crore directly to students through its own NBFC. This abrupt reversal comes days after the company announced the investment, a clear capitulation to investor fears over balance sheet risk. Edtech's history with predatory lending, notably BYJU'S, continues to haunt the sector's valuations.
How We Got Here
FinZ Finance, PW's NBFC subsidiary, received its RBI licence last September and began in-house lending in March 2026. PW's shares plunged 18% between May 26 and June 4, following its May 27 announcement of the ₹120 crore investment.
The Numbers
- PW's co-founder Prateek Maheshwari said their core strength is community building, not lending, which is best left to third-party NBFCs.
- The company had claimed its FinZ Finance subsidiary disbursed ₹200 crore in loans over two years with a non-performing asset (NPA) ratio below 1%.
- Lending from an edtech's own balance sheet exposes the company to direct credit risk from student loan defaults, affecting core business.
- BYJU'S' "predatory practices" with student loans have previously been raised in Parliament, highlighting sector-wide regulatory scrutiny.
What Happens Next
🇮🇳 Why This Matters for India
For parents in Tier-2 and Tier-3 cities struggling with high education costs, edtech loan offerings remain crucial, but the sector must navigate affordability without predatory practices.
The Take
PhysicsWallah wins short-term investor confidence, but the real loser here is its ambition to own the entire student lifecycle, including financing. This pullback highlights that even for cash-rich edtech, credit underwriting is a specialised, risky business — not a quick cash grab.
Source:
MediaNama ↗