In order to give a major push for the creation of high quality infrastructure in premier educational institutions, Union Cabinet approved the establishment of Higher Education Financing Agency (HEFA). It would provide financial assistance to centrally aided institutes for promotion of world class infrastructure. The financing agency would be promoted by HRD in conjunction with Non Banking Financial Company (NBFC).
According to an official statement, the HEFA would be jointly promoted by the identified promoter and the Ministry of Human Resource Development (MHRD) with an authorized capital of Rs 2,000 crore. The Government equity would be Rs 1,000 crore. The HEFA would be formed as a special purpose vehicle (SPV) within a PSU Bank/ Government-owned-NBFC (Promoter).
It would leverage the equity to raise up to Rs 20,000 crore for funding projects for infrastructure and development of world class labs in centrally aided institutes. All centrally aided institutes for higher education in the country are eligible for membership after following specific norms in which the willing institutes had to escrow certain amount to HEFA as a bond.
The institution can borrow capitals from HEFA for a period of 10 years. The institute can repay the loan from its internal accruals - the revenue collected from fees and research earnings. The HEFA would finance specified amount to the institutes seeking for funds according to the weightage of the bond they had agreed to escrowed at the beginning.
The interest of loan would be serviced by the government under regular plan assistance. The HEFA would also mobilize Corporate Social Responsibility (CSR) funds from PSUs/Corporates, which would in turn be released for promoting research and innovation in these institutions on a grant basis.
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