Credit guarantee cover extended to ₹7.5 lakh under revamped Model Skill Loan Scheme
- July 26, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
No Comments
Credit guarantee cover extended to ₹7.5 lakh under revamped Model Skill Loan Scheme
Subject: Schemes
Sec: Employment
Context:
A similar scheme launched in 2015 saw low fund utilisation because individual loans were limited to ₹1.5 lakh, though high-end skilling courses cost much more; new scheme also expands lender network to NBFCs, small banks.
More on News:
- The Union Budget announcement hiking the eligible size of loans for high-end skilling courses under the Model Skill Loan scheme from ₹1.5 lakh to ₹7.5 lakh.
- The earlier Credit Guarantee Fund Scheme for Skill Development, notified in November 2015 to create a credit guarantee fund for courses aligned to the National Skill Qualification Framework, faced multiple challenges.
- Under the new scheme, the lending network has been broadened from only IBA banks to include Non Banking Financial Companies and small finance banks, with access to more skill courses and higher loan limits.
Model Skill Loan Scheme:
- It was introduced in July, 2015, to offer institutional credit to individuals pursuing skill development courses aligned with National Occupations Standards and Qualification Packs.
- These courses are conducted by training institutes following the National Skill Qualification Framework (NSQF) and lead to certifications, diplomas, or degrees.
- The Scheme applies to all member banks of the Indian Banks’ Association (IBA) and other banks and financial institutions as advised by the Reserve Bank of India (RBI) .
- Features:
- Eligibility: Any Indian National who has secured admission in a course run by Industrial Training Institutes (ITIs), Polytechnics,or in a school recognised by Central or State Education Boards or in a college affiliated with a recognised university, training partners affiliated to National Skill Development Corporation (NSDC) Sector Skill Councils, State Skill Mission, or State Skill Corporation can avail loan for the purpose.
- No specific restriction with regard to age.
- Courses: Aligned with NSQF.
- Duration of Course: No minimum duration.
- Quantum of Finance:Rs. 5,000-1,50,000. Now, increased to Rs 7.5 lakh.
- Moratorium: Duration of the course.
- Repayment Period:
- Loans up to Rs. 50,000: Up to 3 years.
- Loans between Rs. 50,000 to Rs. 1 lakh: Up to 5 years.
- Loans above Rs. 1 lakh: Up to 7 years.
- Coverage: Course fees and expenses for assessment, examination, study material, etc.
- Interest Rate: The interest rate to be charged by the bank should not be more than1.5% p.a. over and above repo-linked-lending-rate (RLLR) or any other external benchmark interest rate conforming to RBI guidelines.
- Revised Skill Loan Scheme:
- Loan Amount: Increased to facilitate loans up to ₹7.5 lakh.
- Guarantee: Backed by a guarantee from a government-promoted fund.
- Beneficiaries: Expected to benefit 25,000 students annually.
- Higher Education Loans for Underprivileged Students:
- Loan Amount: E-vouchers for loans up to ₹10 lakh for higher education in domestic institutions.
- Eligibility: Targeted at students who do not qualify for existing schemes.
- Interest Subvention: Annual interest subvention of 3% of the loan amount.
- Beneficiaries: Directly benefit 100,000 students every year.
- Budget Allocation for Education, Employment, and Skilling:
- Total Allocation: ₹1.48 trillion.
- Comparison: Significant increase from the previous allocation of ₹1.2 trillion in the Interim Budget.