Working Capital Finance for Private Unaided Educational Institutions

Abstract

Private Unaided Educational Institutions are expected to play a major role in the Indian Higher Education system. However, a recurring problem faced by a number of such institutions is delays in payment of salaries. One reason that is put forward by the Institutions is that the scholarship reimbursement towards fees of category students from the Government Department of Social Welfare is delayed. While this might be true, there are a couple of banking solutions that can tackle this issue. One, quite standard mechanism is the provision of a cash credit facility against the fee receivable. Another option in the form of factoring service can also tackle the problem. Based on a sample study of private unaided educational institutions in Ahmednagar District of Maharashtra, this article discusses these practical solutions.