Cabinet Approves Higher Education Financing Agency (HEFA) - Here’s What You Need To Know

The government gave its nod to the formation of the Higher Education Financing Agency (HEFA) on Monday. HEFA, aimed at creating high-quality education infrastructure, is set to raise Rs 20,000 crore from loans and bond sales to boost research oriented infrastructure for premiere institutions like IITs, NITs and IIMs.

Prakash Javadekar, speaking at an event, stated that HEFA would be jointly promoted by the identified promoter and HRD ministry with an authorised capital of Rs 2,000 crore of which government equity would be Rs 1,000 crore.

The body will be formed as a Special Purpose Vehicle (SPV) within a PSU Bank/ Government-owned-NBFC and will help in diversifying the sources of funding. This, in turn, will reduce the pressure on the government, the only source of funding for Central Universities and Instructions.

The body will be equipped to provide 10-year loans for the development of civil and lab infrastructure with interest portion of the loan to be serviced by the government. The body will also be charged with the job of mobilising CSR funds from PSUs and corporates, which would then be used for providing an institutional grant for research and innovation.

The HRD minister explained that the Cabinet’s decision will not result in a fee hike, but an unnamed source, talking to the Live Mint, stated that an effect on fee can’t be ruled out.

“If they hike fee, they will have more money to put in the escrow amount and will be eligible for more funds from the HEFA,” the unnamed source was quoted as saying.

While all institutions funded by the central university would be eligible for joining as members of the HEFA, the credit limit they receive will be decided by the body based on the amount agreed to be escrowed from the internal accruals of the institution.