VCs welcome move to allow universities to float bonds

VCs welcome move to allow universities to float bonds

Proposal aimed at helping funds-starved institutes to create academic infrastructure

The Karnataka Knowledge Commission’s (KKC) recommendation to the government to permit universities to float bonds to fund their infrastructure projects has been welcomed by the cash-strapped varsities.

It is no secret that many universities in the State are lagging behind in infrastructure development for want of funds and, a visit to most of the hostels or laboratories will stand proof of this.

The KKC in its report on Higher Education Vision-2020 has recommended to the government that it “allow universities to float long term, 10-year plus bonds for creating necessary academic and hostel infrastructure, labs, libraries etc.”

Visvesvaraya Technological University (VTU) Vice Chancellor Maheshappa said that the VTU is already generating revenue and if the government gives a nod to the KKC recommendation, many universities will benefit.

“Most universities which are lagging behind for want of funding may see a drastic transformation. The State, in its present situation, has not been able to provide adequate funds. If the recommendation is accepted, then there can be a remarkable change,” he said.

Bangalore University Vice-Chancellor Thimme Gowda said: “It is a good move. We are unable to carry out too many projects with the current funds, it will be a relief if bonds dedicated to universities can be used to raise money.”

Former Bangalore University Vice Chancellor M S Thimmappa said that the universities are left with no options but to go for something like this.

“With the funds that the government provides, BU is able to fulfil only 60 per cent of its maintenance requirement and the remaining funds are raised internally. The only kind of projects and development that happen are through the UGC funds and even that is not enough if we want to take our higher education forward to stay in the race,” he said.

He said that a Task Force set up by the S M Krishna government had, in fact, proposed setting up of a ‘University Bank’ to cater to the needs.

Rajiv Gandhi University of Health Sciences (RGUHS) Registrar, Ashok Kumar said:  “We are educational institutions who do not strive to become brands. There needs to be more of an impetus to self-enhanced schemes rather than asking universities to issue bonds,” he said.

He also questioned whether the bonds will sell, given the ‘credibility’ crisis in most Universities.

Experts point out that the universities might have to get certified by agencies so as to find subscribers for the bonds. Given the nature of their functioning, this could be one of the challenges, one of them said.

Speaking to Deccan Herald, Mohan Das Pai, chairman, Mission Group on Higher Education Policy constituted by KKC said: “We believe that it is essential for universities to raise money to fund their development projects. It is known that there is a fund-crunch and this will help them.”

He said that though the bond, according to the proposal, will be floated by the universities they will not be liable to pay the principal amount to
the subscribers of the said bonds.

“The proposal is to allow universities to float bonds with government security which will take care of the principal amount, while the universities will pay the interest,” Pai said.

M K Sridhar, Member Secretary and Executive Director, KKC said that the recommendations have been submitted to the department of Higher Education recently and that the decision on it is pending.