The Centre has introduced a revised Model Skill Loan Scheme, designed to provide financial support for skill development courses to the nation’s youth. Launched on Thursday by Jayant Chaudhary, Minister of State for Skill Development and Entrepreneurship and Education, the scheme aims to remove financial barriers to advanced skill education.
The updated scheme offers collateral-free loans of up to Rs. 7.5 lakh and expands eligibility to include Non-Banking Financial Companies (NBFCs), NBFC-Micro Finance Institutions (NBFC-MFIs), and small finance banks. This initiative is part of a broader effort to develop a future-ready workforce by facilitating access to high-cost, advanced skill courses essential for meeting emerging industrial demands.
During the launch, Jayant Chaudhary emphasized that the scheme empowers youth with financial support for advanced skilling through collateral-free loans. He pointed out that NBFCs, NBFC-MFIs, and small finance banks are now eligible lenders.
“As the world, including India, undergoes rapid technological and societal shifts, our education systems and job market must adapt to keep pace. We’re working hard towards a vision for 2047, with the government thinking strategically about these changes; this Model Skill Loan Scheme is a reform and liberalisation for which there was demand of the Public,” he said.
The Ministry of Skill Development and Entrepreneurship acknowledges the significant role of NBFCs and microfinance institutions in the skill loan market. Recent amendments to the scheme’s guidelines, approved by the Ministry of Finance, provide a guarantee against default for up to 75% of the distributed loans.The maximum loan size eligible for a credit guarantee has been increased from ₹1.5 lakh to Rs. 7.5 lakh.
The revised Model Skill Loan Scheme builds upon the Credit Guarantee Fund Scheme for Skill Development (CCFSSD), launched in 2015, and aims to ensure a steady flow of affordable finance for low-income youth to pursue specialized skill courses.