TAG: GS-3: ECONOMY
THE CONTEXT: A revamped ‘model skill loan scheme’ for skill development courses was launched by the government on 25th July 2024, with a fresh maximum loan limit of Rs 7.5 lakh — up from the previous amount of Rs 1.5 lakh.
EXPLANATION:
Minister of State (Independent Charge), Ministry of Skill Development & Entrepreneurship (MSDE) and MoS, Ministry of Education, Government of India launched the revised Model Skill Loan Scheme aimed at providing access to skilling courses, including high-end courses which often come with high course fee, without any financial constraints.
About the Scheme:
- Increased Loan Limit: The maximum loan amount has been increased from Rs 1.5 lakh to Rs 7.5 lakh, responding to the rising costs of skill development courses and aiming to make higher-cost courses more accessible.
- Broadened Lending Framework: The revised scheme now includes not only private, public, and foreign banks (members of the Indian Banks’ Association) but also non-banking financial companies (NBFCs), NBFC-MFIs (micro-finance institutions), and small finance banks as eligible lending institutions. This expansion aims to improve the scheme’s reach and utilization.
- Course Eligibility Expansion: The scheme now covers more skill courses, including non-National Skill Qualification Framework (NSQF)-aligned courses that are onboarded on the Skill India Digital Hub platform. Previously, only NSQF-aligned courses were eligible.
- Government Guarantee: As per the announcement by Finance Minister, the loans under this scheme will come with a guarantee from a government-promoted fund. This guarantee is likely aimed at reducing the risk for lending institutions and encouraging them to offer these loans more freely.
- Target Beneficiaries: The revised scheme is expected to benefit around 25,000 students annually, providing them with the financial means to pursue skill development courses.
- Focus on Future Readiness: The scheme’s revision aligns with a broader government vision to prepare the workforce for future technological advancements and changing job market demands.
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