The Union Cabinet has approved the establishment of HEFA (Higher Education Financing Agency) in order to assist premier educational establishments in India equip themselves with better infrastructure. This was announced following the latest cabinet meeting chaired by the Prime Minister, Narendra Modi.
HEFA is promoted by a collaboration between the Ministry of Human Resources and the Non-Banking Financial Company (NBFC). According to an official statement, HEFA has an authorised capital of Rs. 2000 crore, the government equity is Rs. 1000 crore.
HEFA is designed to operate as a special purpose vehicle under the circumscribed BNFC or PSU Bank (government owned). This will raise the organisation’s value to Rs. 20,000 crore specified to help centrally-aided institutes such as IITs, NITs and IIMs set up world-class laboratories and infrastructure.
Eligibility and conditions
All Higher Education Institutions that are centrally-aided are eligible to apply for loans from HEFA. Specific norms need to be adhered to including the need for these institutes to escrow a specific sum as a bond. The financial assistance provided by HEFA for each institution is set based on the weightage of this bond.
HEFA can lend capitals to an institution for ten years. It also outlines that the funds from CSR can be given out as grants to different institutes when mobilised by HEFA. In terms of the interest, this is serviced by the government (under regular plan assistance).