Higher Education Financing Agency (HEFA)

Established to give a major push for creation of high quality infrastructure in premier educational institutions.

About HEFA:
  • The HEFA will be jointly promoted by the Union Ministry of Human Resource Development (MHRD) and identified Promoter.
  • HEFA will have an authorised capital of 2,000 crore rupees and the government equity would be 1,000 crore rupees
  • It will be formed as a Special Purpose Vehicle (SPV) within a PSU Bank or the Government-owned-NBFC (Promoter)
  • It would leverage the equity to raise up to Rs. 20,000 crore for funding infrastructure and development projects of world class Labs in IIMs/IITs/NITs and such other institutions.
  • The HEFA will also mobilise CSR funds from Corporates/PSUs which will in turn be released for promoting research and innovation in these institutions on grant basis
  • The principal portion of the loan will be repaid through the ‘internal accruals’ of the institutions earned through the fee receipts, research earnings etc
  • All the Centrally Funded Higher Educational Institutions will be eligible to join as members of the HEFA
  • For joining as members, the educational institution must agree to escrow a specific amount from their internal accruals for a period of 10 years to the HEFA.
  • This escrow will secure the future flows that would be securitised by the HEFA for mobilising the funds from the market.
  • Each member institution would be eligible for a credit limit based on the amount agreed to be escrowed from the internal accruals as decided by HEFA
Modalities of operation of HEFA
  • HEFA is novel method for funding premier institutions by using instrument of securitising future flows.
  • Under it, each institution agrees to escrow specific amount from their internally earned resources and not through government grants.
  • This forms basis for credit line which can be used by institution for creating required capital and research assets.
  • The Principal portion is repaid from escrowed amount and interest is met by Government.
  • For institution, this is interest-free amount and gives facility to institution to build the required research infrastructure of world class
Utility of this Topic:
  • HEFA can be used as a keyword for writing answers/essay on education especially higher education under steps taken by government.
  • You can also give suggestion in your answer for say health, primary education etc. that government should make agencies like HEFA for those sectors also
  • For Prelims, a factual question can be formed about the structure and functions of HEFA



Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top