With an objective to operationalise the Higher Education Financing Agency, Canara Bank has signed a Memorandum of Understanding (MoU) with the Union Ministry of Human Resource and Development. The Union Cabinet approved the establishment of Higher Education Financing Agency (HEFA) in September 2016.
The main objective behind the government's approval for HEFA is to enhance and create high-quality capital assets and infrastructure in the premier educational institutions. Through this MoU, HRD Ministry and Canara Bank will jointly promote the HEFA with an authorised capital of Rs. 2,000 crore.
HEFA has been approved with a specific intention, i.e., to leverage the equity which would raise up to Rs. 20,000 crore. The funds will be used to develop and improve infrastructure as well as setting up of world-class laboratories in premier institutes like the NITs/ IIMs/ IITs and other such institutes.
HEFA will also mobilise CSR funds from the corporates and Public Sector Undertakings (PSUs), which will be used to promote innovation and research in the premier institutes. Research and innovation are the two areas which the premier institutes in India lack and these funds will make the institutes achieve global standards.
Earlier, the government had announced that HEFA will finance civil as well as lab infrastructure projects through a loan for ten years. However, the major portion of the loan will be paid through ‘internal accruals’, i.e., the money earned through fee receipts and research. All the institutes which are centrally funded are eligible to join as the members of Higher Education Financing Agency (HEFA).