The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi on July 4, 2018 approved the proposal for expanding the scope of Higher Education Financing Agency (HEFA) by tasking it to mobilise Rs 1,00,000 crore for Revitalizing Infrastructure and Systems in Education (RISE) by 2022.
The proposal also called for enhancing the capital base of the Higher Education Financing Agency to Rs 10,000 crore.
To expand the facility to all institutions, especially to the ones that were set up after 2014, central universities that have very little internal resources and school education/health education infrastructure like AIIMS, Kendriya Vidyalayas, the CCEA has approved the following five windows for financing under HEFA and the modalities of repaying the Principal portion of the fund:
Technical Institutions more than 10 years old: The institutions will have to repay the whole Principal Portion from the internally generated budgetary resources.
Technical Institutions started between 2008 and 2014: The institutions will be required to repay 25 per cent of the principal portion from internal resources and receive grant for the balance of the Principal portion.
Central Universities started prior to 2014: They will have to repay 10 per cent of the principal portion from internal resources and receive grant for the balance of the Principal portion.
Newly established Institutions started after 2014: For funding construction of permanent campuses, a grant would be provided to these institutions for complete servicing of the loan including the Principal and interest.
Other educational institutions and grant-in-aid institutions of Ministry of Health: All the newly set up AIIMS and other health institutions, the Kendriya Vidyalayas / Navodaya Vidyalayas would be funded and the Department/Ministry concerned will give a commitment for complete servicing of the principal and interest by ensuring adequate grants to the institution.
• The CCEA also permitted the HEFA to mobilise Rs 1,00,000 crore over the next 4 years till 2022 to meet the infrastructure needs of these institutions.
• The cabinet also approved increasing the authorised share capital of HEFA to Rs 10,000 crore.
• It also approved infusing additional Government equity of Rs 5,000 crore (in addition to Rs 1,000 crore already provided) in HEFA.
• It has also approved that the modalities for raising money from the market through Government guaranteed bonds and commercial borrowings would be decided in consultation with the Department of Economic Affairs so that the funds are mobilised at the least cost.
The move would enable addressing the needs of all educational institutions with differing financial capacity in an inclusive manner.
It would also enable HEFA to leverage additional resources from the market to supplement equity, to be deployed to fund the requirements of institutions.
The government guarantee would also eliminate the risk factor in bonds issue and attract investment into this important national activity.
The Higher Education Financing Agency was set up on May 31, 2018 by the Central Government as a non-profit, Non-Banking Financing Company (NBFC) for mobilising extra-budgetary resources for building crucial infrastructure in the higher educational institutions under the central government.
In the existing arrangement, the entire principle portion is repaid by the institution over ten years and the interest portion is serviced by the Government by providing additional grants to the institution.
So far, funding proposals worth Rs 2,016 crore have been approved by the HEFA.
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