Revamped Model Skill Loan Scheme
Context / Why in News:
- The Indian government has introduced a significantly revised version of the ‘Model Skill Loan Scheme’ to improve access to skill development programs. The updated scheme was announced as part of the Union Budget for 2024-2025 and addresses previous limitations that hindered its effectiveness.
Introduction
- Launched originally in 2015, the Model Skill Loan Scheme aimed to provide financial support for skill development courses. However, the initial scheme faced challenges due to a low maximum loan limit, leading to limited uptake and impact. In response to these issues, the government has revamped the scheme to substantially increase its benefits and reach.
Key Features of the Revamped Scheme
- Increased Loan Limit: The maximum loan amount has been raised from Rs 1.5 lakh to Rs 7.5 lakh. This significant increase is designed to make skill development more accessible by covering higher course fees and related expenses.
Expanded Eligibility:
- The revised scheme now includes a broader range of lending institutions. Apart from traditional banks, the scheme now accommodates non-banking financial companies (NBFCs), NBFC-MFIs (micro-finance institutions), and small finance banks as eligible lenders.
Broadened Coverage:
- Previously, the scheme only covered courses aligned with the National Skill Qualification Framework (NSQF). The updated version now includes non-NSQF courses listed on the Skill India Digital Hub platform, thus broadening the scope of available skill development opportunities.
Targeted Reach:
- The revamped scheme aims to support 25,000 students annually, reflecting the government’s commitment to expanding access to skill training.
Previous Performance:
- As of March 2024, the original scheme had disbursed loans amounting to Rs 115.75 crore to 10,077 borrowers. This data highlights the limited utilization of the scheme due to high course fees and other financial constraints.
Conclusion / Way Forward:
- The revamped Model Skill Loan Scheme represents a substantial step forward in making skill development more accessible to a larger segment of the population. By increasing the loan limit and broadening the range of eligible courses and lending institutions, the scheme is expected to address previous limitations and significantly enhance its impact. Moving forward, the success of this scheme will depend on its effective implementation and outreach efforts to ensure that it meets the needs of aspiring students across the country. The government’s initiative underscores its commitment to fostering skill development and empowering individuals through improved financial support mechanisms.
