The fund provided by HEFA is over and above the grants given by the Government to these institutes.
Taking a step towards the improvement of research and related infrastructure at higher-educational institutes in the country, the Higher Education Funding Agency (HEFA) has started its operations and approved a project of Rs 2066.73 Cr. This amount is approved for improvement of research infrastructure at IIT Bombay, Delhi, Madras, Kharagpur, Kanpur and NIT Suratkal.
HEFA is a not-for-profit organisation, created to leverage funds from the market and supplement them with donations and CSR funds. These funds are used to finance the top educational institutes in the country so that they can improve the quality of education and infrastructure.
HEFA has a unique method of financing the educational institutions. It provides finance to the institutes, and the institutes agree to escrow a specific amount from their internally-earned resources (not Govt. grants) to HEFA. The institutes repay the principal from the escrowed amount, while the interest is paid by the Government. So, the amount turns out to be an interest-free amount and enables higher institutes to improve the level of infrastructure and quality of education.
The fund made available by HEFA is in addition to the grants that the Government gives to these educational institutes.
HEFA has a unique method of financing the educational institutions. It provides finance to the institutes, and the institutes agree to escrow a specific amount from their internally-earned resources (not Govt. grants) to HEFA.
Expressing happiness over the approval of interest-free loans by the HEFA Board, Union HRD Minister Shri Prakash Javadekar said that this was a historic step for financing the needs and promotion of research and innovation beyond budgetary allocations. The Union Budget gives ample allocation and grants to higher-education institutions, but still, there is a greater need. The vision of Prime Minister Narendra Modi and the resolve of Finance Minister Arun Jaitley have made possible the operationalisation of HEFA to extend funds beyond budgetary provisions.
HEFA will mobilise Rs. 20,000 Cr through market borrowing and will release the same to the Government institution as interest-free loans.
Canara bank, partner of HEFA, has given Rs 50 Cr equity to HEFA, while the Government has released Rs 250 Cr equity. HEFA has been granted a license of NBFC by RBI and can leverage equity to mobilse money from the market.
Given the importance of quality infrastructure and education at the higher-education level, HEFA is expected to make a big impact by providing necessary funds to the institutes.
Earlier, the Government started an initiative ‘Institute of Eminence’ to help top educational institutes in the country match international standards.