For providing additional funds for research and related infrastructure in the higher educational institutions, Higher Education Funding Agency (HEFA) has been constituted.
The HEFA is a not-for-profit organisation that will leverage funds from the market and supplement them with donations and CSR funds.
Modalities of operation of HEFA
The HEFA is a novel method of funding the premier institutions by using the instrument of ‘securitising the future flows’. Under this, each institution agrees to escrow a specific amount from their internally earned resources (not govt grants) to HEFA. This forms basis for a credit line which can be used by the institution for creating the required capital and research assets. The Principal portion is repaid from the escrowed amount and the interest is met by Govt. For the institution, this is an interest-free amount and gives facility to the institution to build the required research infrastructure of world class.
The HEFA was registered as a Section – 8 Company under the Companies Act on 31st May 2017. Canara Bank has been identified as the partner for setting up the Company.
Capital base of HEFA expanded
Recently the government has approved the expansion of capital base of Higher Education Financing Agency (HEFA) to Rs. 10,000 crore. In order to meet the demands of educational infrastructure creation under Revitalising Infrastructure & Systems in Higher Education (RISE by 2022), HEFA has been authorized to leverage and mobilise resources from the market through commercial borrowings or by issuing Government guaranteed bonds.
All financing of educational infrastructure of Centrally Funded Educational Institutions would henceforth be through HEFA loans, with the Government undertaking complete interest servicing for all institutions and repayment of principal in various bands, based on the age profile and financial capacity of the educational institutions.