A Bill will be brought in Parliament for setting up a finance corporation to provide low-interest loans to higher educational institutions.
The human resource development (HRD) ministry had already prepared a concept note on the creation of the National Higher Education Finance Corporation (NHEFC). It had started drafting the NHEFC Bill, official sources said.
Earlier, the government was undecided whether to set up this body under an Act of Parliament or register it under Section 25 of the Companies Act.
“It has been decided that the proposed NHEFC will be created by an Act of Parliament, not under the Companies Act, 1956,” sources said.
According to the HRD ministry’s plan, the proposed NHEFC would be an institutional mechanism to address the investment needs in higher education.
The proposed corporation would nurture philanthropic tradition in education by providing loans at lower rates of interest to such agencies for the establishment of higher and vocational institutions in educationally-backward areas.
“It will be a Nabard-like institution in higher education. It will raise debt by issue or sale of bonds for augmenting resource from the market. It will finance the creation of universities. It will grant low-interest loans to philanthropic bodies to come forward in opening institutes,” a senior official said.
The step assumes significance as the requirement of funds for the expansion of higher education in 2009-10 is expected to be to tune of Rs 60,000 crore.
The allocation for higher education in the 11th Plan is Rs 84,000 crore. The proposed NHEFC may have to lend Rs 38,000 crore in 2009-10 to meet the additional requirement.
It will grant loans and advances to scheduled public sector bank or financial institutions approved by the corporation. It will provide lower interest rates on loans for the establishment of higher education with at least 25 per cent of its project cost raised through donations.
