The government has launched an updated version of the ‘Model Skill Loan Scheme’ for skill development courses, significantly increasing the maximum loan limit to ₹7.5 lakh from the previous ₹1.5 lakh. This revision, announced by Finance Minister Nirmala Sitharaman in her budget speech, aims to facilitate greater access to skill development financing, potentially benefiting 25,000 students annually.
Key Changes in the Revamped Model Skill Loan Scheme:
- Increased Loan Limit: The maximum loan amount has been raised to ₹7.5 lakh, addressing the previous scheme’s limitations, where the lower loan cap led to underutilization of funds.
- Expanded Lending Institutions: The revised scheme broadens the range of lending institutions. In addition to private, public, and foreign banks, non-banking financial companies (NBFCs), NBFC-MFIs (micro-finance institutions), and small finance banks are now eligible to offer these loans.
- Broadened Course Eligibility: Unlike the previous version, which only covered courses aligned with the National Skill Qualification Framework (NSQF), the revamped scheme includes non-NSQF courses available on the Skill India Digital Hub platform.
The initial version of the scheme, launched in 2015, saw limited uptake due to the low maximum loan limit and rising course fees, which excluded many high-cost programs. By March 31, 2024, loans amounting to ₹115.75 crore had been extended to 10,077 borrowers.
At the launch event, MoS Jayant Chaudhary from the Ministry of Skill Development and Entrepreneurship emphasized the need for the country to adapt to future technological changes, stressing that the government is now thinking strategically beyond short-term goals. The revised scheme is part of this long-term vision to prepare the workforce for the challenges of the future.
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