Higher Education Financing Agency (HEFA)

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4-Jul-2018: Cabinet approves Revitalising Infrastructure and Systems in Higher Education (RISE) by 2022 

The Cabinet Committee on Economic Affairs has approved the proposal for expanding 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.

Details: In order 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 AIIMSs, 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 (interest continues to be serviced through Government grants in all these cases):

  • 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 started prior to 2014: Repay 10% 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: 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.

The Cabinet has 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 CCEA has also approved increasing the authorized share capital of HEFA to Rs. 10,000 crore, and approved infusing additional Government equity of Rs. 5,000 crore (in addition to Rs. 1,000 crore already provided) in HEFA.

The CCEA 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 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.

Background: HEFA has 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.

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4-Jul-2018: Cabinet approves Revitalising Infrastructure and Systems in Higher Education (RISE) by 2022 

The Cabinet Committee on Economic Affairs has approved the proposal for expanding 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.

Details: In order 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 AIIMSs, 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 (interest continues to be serviced through Government grants in all these cases):

  • 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 started prior to 2014: Repay 10% 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: 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.

The Cabinet has 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 CCEA has also approved increasing the authorized share capital of HEFA to Rs. 10,000 crore, and approved infusing additional Government equity of Rs. 5,000 crore (in addition to Rs. 1,000 crore already provided) in HEFA.

The CCEA 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 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.

Background: HEFA has 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.

2017

29-Nov-2017: Higher Education Funding Agency (HEFA) approves projects for Rs. 2,066.73 Cr to six higher education institutions.

For providing additional funds for research and related infrastructure, Higher Education Funding Agency (HEFA), has started its operations. The HEFA Board had held its 2nd meeting today and approved projects for Rs. 2,066.73 Cr for six institutions – IITs Bombay, Delhi, Madras, Kharagpur, Kanpur and NIT Suratkal. These funds would be used to improve the research infrastructure in these institutions to further improve their standing at the global level.

These funds are in addition to the grants that Government gives to these institutions. As per the scheme, HEFA would mobilise Rs. 20,000 Cr through market borrowing and would release the same to the Government institution as interest- free loans.

HEFA was born out of the vision of Prime Minister Narendra Modi for providing additional finance for promoting research in the higher educational institutions.  The intent to create HEFA was made in the Budget speech of 2016-17 which stated that, “We have decided to set up a Higher Education Financing Agency (HEFA) with an initial capital base of Rs.1,000 crores. The HEFA will be a not-for-profit organisation that will leverage funds from the market and supplement them with donations and CSR funds. These funds will be used to finance improvement in infrastructure in our top institutions and will be serviced through internal accruals”.  The Union Cabinet has approved setting up HEFA on 12th September 2016.

Modalities of operation of HEFA: The HEFA is a novel method of funding the premier institutions by using the instrument of ‘securitising the future flows’. Under this, each institution agrees to escrow a specific amount from their internally earned resources (not govt grants) to HEFA. This forms basis for a credit line which can be used by the institution for creating the required capital and research assets. The Principal portion is repaid from the escrowed amount and the interest is met by Govt. For the institution, this is an interest-free amount and gives facility to the institution to build the required research infrastructure of world class. 

Operationalising HEFA: The HEFA was registered as a Section – 8 Company under the Companies Act on 31st May 2017. Canara Bank has been identified as the partner for setting up the Company. Government has released Rs. 250 Cr equity and the Canara Bank has given Rs. 50 Cr equity in the HEFA. RBI has granted a license under the RBI Act for HEFA to operate as NBFC on 21st November 2017 and to leverage the equity to mobilise money from market as per the requirements of the institutions.

The Board has been constituted and held its first meeting under the Chairmanship of Secretary Higher Education on 12thJune 2017.