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HEFA capital base, scope expanded to boost education infrastructure

July 4, 2018
New Delhi: In a major boost to education and research infrastructure, the Cabinet Committee on Economic Affairs today cleared a proposal to expand the scope of Higher Education Financing Agency (HEFA) by enhancing its capital base to Rs. 10,000 crore and tasking it to mobilise Rs. 1,00,000 crore for Revitalizing Infrastructure and Systems in Education (RISE) by 2022.
The CCEA approved the following five windows for financing under HEFA:
Technical Institutions more than 10 years old: Repay the whole Principal Portion from the internally generated budgetary resources.
Technical Institutions started between 2008 and 2014: Repay 25% of the principal portion from internal resources, and receive grant for the balance of the Principal portion.
Central Universities starte prior to 2014: Repay 10% of the principal portion from internal resources, and receive grant for the balance of the Principal portio
Newly established Institutions (started after 2014): for funding construction of permanent campuses: Grant would be provided for complete servicing of loan including the Principal and interest
Other educational institutions and grant-in-aid institutions of Ministry of Health: All the newly set up AIIMSs 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.
These windows have been approved so as to expand this facility to all institutions, especially to the institutions set up after 2014, Central Universities which have very little internal resources, and the school education/health education infrastructure like AllMSs, Kendriya Vidyalayas. The modalities of repaying the Principal portion of the fund (interest continues to be serviced through Government grants in all these cases):
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 mobilized at the least cost.
This would enable addressing the needs of all educational institutions with differing financial capacity in an inclusive manner.

This would enable HEFA to leverage additional resources from the market to supplement equity, to be deployed to fund the requirements of institutions. Government guarantee would eliminate the risk factor in Bonds issue and attract investment in to this important national activity.
HEFA had been set up on 31st May 2017 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 Central Govt. 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.