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.
Key Facts

• 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.

Month: Current Affairs - September, 2016