The Higher Education Financing Agency (HEFA) has become operational and will soon provide a better funding mechanism for the education sector. The credit policy framework for HEFA was approved by the HRD Ministry on Wednesday, August 16, 2017.
The idea of establishing the HEFA was proposed by the HRD Ministry in order to provide better funding to the top educational institutions such as the IITs, IIMs and other central universities of importance.
The objective of HEFA will be to mobilise market funds for the development of infrastructure at central universities and institutes. Funding for the establishment of laboratories, libraries, hostels, etc. will be provided to colleges through HEFA.
With the HEFA, the Government aims to facilitate the flow of funds that are much required in the education sector. The agency will be responsible for providing direct financial aid for research at the top institutes of the country and encourage innovation at higher education level.
According to an official from the HRD Ministry, if an institute wants to apply for a loan worth of Rs. 100 crore, it must ensure that it can generate Rs. 10 crore from its own resources.
Since IITs and IIMs have started requesting for more funds for research-oriented work, infrastructure development, and other developments, more funds are needed despite the hike in the budgetary allocations. This is where HEFA comes into play to help the institutes in achieving global rankings.
To make the process successful, the HRD ministry has urged all the institutes to present proposals for financing from HEFA. An agreement has also been signed by the government with Canara Bank to establish a non-banking financial company.
According to the government, HEFA will be an alternative source of funding that will assist the institutes to meet their requirements if the funds provided by the government prove to be inadequate. The loans provided by HEFA will be over and above the budgetary support.
The official further added that the ultimate motive of starting HEFA is to enable the institutes to become financially self-sustaining bodies. This will help the institutes to self-finance the development that they plan to implement.