Soft loans to boost education infrastructure, research

The Higher Education Financing Agency (HEFA) will provide loans to new institutes of higher learning, including All India Institutes of Medical Sciences (AIIMSs) and other healthcare institutions, to build permanent campuses and create research infrastructure.

It will also provide loans to the Centre-run Kendriya Vidyalayas and Jawahar Navodaya Vidyalayas for infrastructure upgradation.

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the HRD ministry's proposal to expand the scope of the HEFA, which was set up as a non-profit, non-banking financing agency under the Human Resource Development (HRD) Ministry in May last year to provide loans to centrally funded higher education institutions primarily for research infrastructure development.

It also permitted the HEFA to mobilise Rs 1 lakh crore from market borrowing over the next four years till 2022 to meet the infrastructure needs of educational institutions.

For this, the CCEA approved a proposal to infuse additional Government equity of Rs 5,000 crore (in addition to Rs. 1,000 crore already provided) into the HEFA to increase its authorised share capital to Rs 10,000 crore with contributions from its partner organisation, Canara Bank.

“The CCEA has approved the proposal for expanding the scope of HEFA by enhancing its capital base to Rs 10,000 crore and tasking it to mobilise Rs 1,00,000 crore for revitalising infrastructure and systems in education by 2022,” the Government said in a statement after the meeting.

Prime Minister Narendra Modi chaired the CCEA meeting.

Repayment model

The CCEA also approved modalities for repayment of the principal amount of the loan granted by HEFA.

Technical Institutions which are more than 10 years old will have to repay the whole principal portion from internally generated budgetary resources.

“Technical institutions, started between 2008 and 2014, would repay 25% of the principal portion from their internal resources, and receive grant for the balance of the principal portion,” the government said.

The Central universities, started prior to 2014, will have to repay 10% of the principal portion from internal resources and receive grant for the repayment of the balance of the principal portion.

Assured grants

For funding construction of permanent campuses of the institutions started after 2014, grants would be provided for complete servicing of loans, including the principal and interest.

“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 institutions,” the government said.

The CCEA 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 mobilised at least cost.