The Higher Education Funding Agency (HEFA) has approved projects worth over Rs. 2,066 crore for six higher educational institutions to improve the research infrastructure and further their standing at global level. These six institutes are IITs Bombay, Delhi, Madras, Kharagpur, Kanpur and NIT Suratkal.
Decision in this regard was taken at 2nd HEFA Board meeting chaired by Chairmanship of Secretary Higher Education. The approved funds will be in addition to grants being given to these institutions by the government.
Higher Education Funding Agency (HEFA)
HEFA was set in September 2016 after it received Cabinet approval to provide financial assistance to institutes of higher education in addition to grants given by Union Ministry of Human Resources Development. It has authorised capital of Rs. 2000 crore. Government equity in it is Rs.1000 crore.
It is not-for-profit organisation that will leverage funds from market and supplement them with donations and Corporate Social Responsibility (CSR) funds. These funds will be used to finance improvement in infrastructure in top institutions and will be serviced through internal accruals.
Modalities of operation of HEFA
HEFA is novel method for funding premier institutions by using instrument of securitising future flows. Under it, each institution agrees to escrow specific amount from their internally earned resources and not through government grants.
This forms basis for credit line which can be used by institution for creating required capital and research assets. The Principal portion is repaid from escrowed amount and interest is met by Government. For institution, this is interest-free amount and gives facility to institution to build the required research infrastructure of world class.
Operationalisation of HEFA
HEFA was registered as Section – 8 Company under Companies Act in May 2017. Canara Bank was identified as partner for setting up Company. RBI also has granted license under RBI Act for HEFA to operate as Non-Banking Financial Company (NBFC) in November 2017 and to leverage equity to mobilise money from market as per requirements of the institutions.