Skill loan scheme set for overhaul

The government is proposing to revamp the Skill Loan Scheme, which has failed to take off as targeted, and offer some additional benefits such as lower interest rate and relaxation in the repayment schedule.

A decision to this effect is likely to be made soon and could be announced in the upcoming Budget, a top government official told ET.

"Government is taking a holistic approach towards skilling ... This is essential as we want to put skilling on a fast track to cover up the loss of two years due to Covid and to ensure India has enough skilled workforce as we gear up for large-scale manufacturing in India under the production-linked incentive scheme for over a dozen sectors," the official added.


Some of the key changes being considered include incentivising banks to enhance lending for skilling, relaxation in the loan eligibility criteria and the repayment conditions.

The need for a revamp has been felt following a dismal offtake of loans under the scheme so far.

Since its launch six years back, the Skill Loan Scheme had benefited just 6,018 individuals with Rs 64.37 crore disbursed till October 31, 2021. The scheme was launched by Prime Minister Narendra Modi with much fanfare in 2015, targeting 3.4 million youth with skilling loans in five years.

The skills development secretary recently held a meeting with top officials of National Credit Guarantee Trustee Company, Indian Banks' Association, public sector and private sector banks and other stakeholders to discuss the proposed revamp of the scheme.