The Higher Education Financing Agency (HEFA) is set to take off soon, with the Ministry of Human Resource Development (MHRD) asking Centrally funded higher education institutions to send their project proposals to be financed by the agency.
Funding from HEFA is expected to boost infrastructure, especially state-of-the-art laboratories, in key institutions such as the Indian Institutes of Technology (IITs), the Indian Institutes of Management (IIMs), and the Indian Institutes of Information Technology (IIITs).
“We have sent letters to all institutions, asking them for proposals. The HEFA Board will then assess and approve them. The Board may meet as early as three weeks from now if we get proposals promptly,” an MHRD official said.
As per the funding mechanism, an institution can claim 10 times the sum it escrows in the first year. “If an institution escrows ₹10 crore, it can get approval for a ₹100-crore project. It has to escrow ₹10 crore each year for 10 years, which will take care of the principal amount,” the official said. “The entire amount will not be released right in the beginning. It will be released as per the requirement and progress of the project.”
The Union Cabinet had approved HEFA in September 2016 as a Special Purpose Vehicle with a public sector bank (Canara Bank). It would be jointly funded by the promoter/bank and the MHRD with an authorised capital of ₹2,000 crore. The government equity would be ₹1,000 crore.
HEFA will leverage the equity to raise up to ₹20,000 crore for the funding of world-class infrastructure at the IITs, IIMs, the National Institutes of Technology (NITs) and such other institutions.
The agency is also expected to mobilise Corporate Social Responsibility (CSR) funds from public sector units (PSUs) and corporates. These would be released as grants to eligible institutions for promoting research and innovation.
HEFA has been set up to finance civil and laboratory infrastructure projects through 10-year loans. The principal portion of the loan will be repaid through internal accruals, to be earned by the institutions through fee receipts and research earnings. The government will service the interest through the regular (annual) plan assistance. Any Centrally funded higher education institution can become a member of HEFA by escrowing a specific amount to it from its internal accruals.