Union Cabinet approves establishment of Higher Education Financing Agency
The Union Cabinet has approved establishment of Higher Education Financing Agency (HEFA) to give a major push for creation of high quality infrastructure in premier educational institutions.
The HEFA will be jointly promoted by the Union Ministry of Human Resource Development (MHRD) and identified Promoter.
- HEFA will have an authorised capital of 2,000 crore rupees and the government equity would be 1,000 crore rupees.
- It will be formed as a Special Purpose Vehicle (SPV) within a PSU Bank or the Government-owned-NBFC (Promoter).
- It would leverage the equity to raise up to Rs. 20,000 crore for funding infrastructure and development projects of world class Labs in IIMs/IITs/NITs and such other institutions.
- The HEFA will also mobilise CSR funds from Corporates/PSUs which will in turn be released for promoting research and innovation in these institutions on grant basis.
- The HEFA will finance the civil and lab infrastructure projects in educational institutions through a 10-year loan.
- The principal portion of the loan will be repaid through the ‘internal accruals’ of the institutions earned through the fee receipts, research earnings etc.
- The Central Government would service the interest portion of the loan through the regular Plan assistance.
- All the Centrally Funded Higher Educational Institutions will be eligible to join as members of the HEFA.
- For joining as members, the educational institution must agree to escrow a specific amount from their internal accruals for a period of 10 years to the HEFA.
- This escrow will secure the future flows that would be securitised by the HEFA for mobilising the funds from the market.
- Each member institution would be eligible for a credit limit based on the amount agreed to be escrowed from the internal accruals as decided by HEFA.