Impact-finance

 Today ‘Skill Economy’ is market led as new age learning is finding its way in the skill development eco-system. We are witnessing an accelerated fee-based market as youths from urban and semi urban areas are recognizing the availability of skilling and livelihood improvement opportunities. There are ample opportunities for choice of skill courses for any aspiring candidate in sectors such as healthcare, IT, AI-data science, cloud application, digital marketing, hospitality, animation, gaming, graphic designing, drone technology, etc.  These are demand led courses for which the fee is paid by the candidate through self-financing or by availing skill-loan. To scale up the market for fee-based advanced level skill courses, there is a need to ensure availability of funding avenues for candidates to undertake such advanced level courses as these courses entail higher course fees. Access to finance is a significant constraint for many aspiring candidates to pay for futuristic and in-demand industry skills courses. Skill Loan Guarantee Scheme (Scheme) anchored by Ministry of Skill Development & Entrepreneurship has been modified in July 2024 to ensure supply of affordable institutional credit to individuals for undertaking skill development courses.

The Modified Skill Loan Guarantee Scheme notified in July 2024 brings significant changes compared to the earlier scheme launched in July 2015. These changes are aimed at expanding the scheme's reach and effectiveness in supporting skill development across India.

• Loan Limit:
  1. 2015 Scheme: The maximum loan amount was capped at ₹1.5 lakh.
  2. 2024 Scheme: The loan limit has been increased to ₹7.5 lakh, allowing students to access larger financial support, especially for high-cost courses.
• Eligible Lending Institutions:
  1. 2015 Scheme: Only banks were eligible lending institutions for providing loans.
  2. 2024 Scheme: The revised scheme includes non-banking financial companies (NBFCs), micro-finance institutions (MFIs), and small finance banks as eligible lenders, broadening the access points for students.
• Course Coverage:
  1. 2015 Scheme: Primarily focused on courses aligned with the National Skill Qualifications Framework (NSQF).
  2. 2024 Scheme: Now includes a wider range of skill development courses, including non-NSQF courses offered by Training Entities on-boarded on Skill India Digital Hub (SIDH), thereby offering more options for students.
• Course Fee:
  1. 2015 Scheme: Only tuition/course fee was included as an eligible component for loan
  2. 2024 Scheme: Apart from the regular course fee, the component of skill loan also includes any other reasonable expenditure found necessary for completion of the course including but not limited to assessment fee, examination fee, library charges, laboratory fee, caution deposit, purchase of books, equipment’s and instruments, etc. may also be covered. Also, the cost of boarding and lodging if necessary be considered on merit based on the cost of living in the particular area.
• Credit Guarantee and Accessibility:
  1. 2015 Scheme: The uptake was low due to stringent credit requirements.
  2. 2024 Scheme: With enhanced credit guarantees cover, skill loans will be more accessible even to those with weaker credit histories.
• Strategic Focus:
  1. 2015 Scheme: Focused broadly on supporting skill development.
  2. 2024 Scheme: Aligns with long-term strategic goals, such as adapting to future technologies and job market changes. 

The modified scheme is expected to benefit the skilling eco-system in varied ways: 

• Increased Enrollment: Easier access to loans for students will lead to higher enrollment rates for training partners thereby expanding their market reach.
• Reduced Rejections with increased financial Security to lending institutions: The guarantee provided by the scheme reduces the risk for financial institutions, encouraging them to offer loans to even students from economically weaker sections who might not have been able to afford skill development training otherwise.
• Sustainability: The increased and steady flow of students and funds will help skilling institutions sustain and grow their operations, contributing to the overall success of the skill development ecosystem in India.

These modifications are expected to make the scheme more impactful by addressing the limitations of the previous version, especially in terms of financial accessibility and the variety of courses covered.

Beneficiary profile (https://nsdcindia.org/sib)

Total enrolment: 34460+ (until 31st Jan,2025)

Women enrolment: 74%

Sectors covered: 14

States covered: 18

Cohort performance (to be retained from current webpage)

Consortium of Partners (to be retained from current webpage)

Partner bytes: (to be retained from current webpage)

1. Student case studies (to be retained from current webpage)

2. Hear from our trainee video (to be retained from current webpage)

3. Media Highlights (to be retained from current webpage)

NSDC’s CSR programs are structured around NSDC’s core values:

• Impact: NSDC’s CSR programs are committed to delivering measurable, scalable, and sustainable socio-economic impact. By aligning with national development priorities and local community needs, CSR programs are designed to enhance livelihoods, build resilience, and drive long-term transformation in the lives of target groups.
• Integrity: Guided by principles of ethical governance, transparency, and accountability, NSDC’s CSR programs operates with the highest standards of integrity. Collaborative efforts are built on trust and responsibility, ensuring that all interventions uphold dignity, respect, and social justice.
• Inclusion: NSDC’s CSR programs are driven by a strong commitment to equity. The programmes actively prioritize vulnerable and marginalized groups including women, transgender, especially abled and socio-economically marginalized communities and minorities ensuring access to skilling & entrepreneurship opportunities for livelihood generation.
• Innovation: NSDC’s CSR programme fosters a culture of innovation by leveraging technology, social enterprise models. Programs are designed to be agile, context-responsive, and future-ready, empowering communities to thrive in a rapidly evolving socio-economic landscape.

Risk Guarantee structure is tool that can enable lending institutions to pump in sizeable commercial capital to augment the lending portfolio in skilling ecosystem. Under this model of financing, NSDC provides risk guarantee to lending institutions to deploy commercial capital for onward lending in the form of skill loans to aspiring candidates pursing in-demand market led skill courses. Risk of default for such lending in borne by the risk guarantee provided by NSDC. 

Alternatively, donor capital is taken as guarantee by NSDC to provide concessional capital for outcome based social projects to finance working capital / project finance needs of implementing organizations / service providers. The guarantee structure boosts supply of institutional credit for development projects and significantly scales up the beneficiaries especially from economically weaker sections of the community. Upon successful outcome of the project, the repayment of working capital / project finance loans is done by the outcome funder / grant provider. The risk of under-performance is subsumed by the guarantee provider and implementing organization.

Under this structure, NSDC along with other impact investors provides risk capital upfront to fund the service provider for pre-determined social interventions. The service provider delivers the interventions to achieve pre-determined outcomes. The outcome is verified by an independent third-party evaluator. The under-performance of the project, if any, is borne by NSDC as risk investor. However, upon successful outcomes, the risk investors get repaid by outcome funders. The result is maximum impact as capital commitment by risk investors is responsibly deployed, service provider’s performance is outcome oriented as its payout is linked to its performance and outcome funder can replace traditional grant model by paying only if project delivers predetermined outcome of the project. 

Impact capital from government and impact investors is deployed for outcome-based skilling programs 

Social Stock Exchange functions as a unique fund-raising platform for Social Enterprises to mobilize funds for Skill Development Projects / Programs through private placement or public issue of its instruments listed on SSE. 

SSEs will make use of mature financial and capital markets to channelize and leverage resources towards social causes whose impact will be measurable. Social Enterprises can choose from a variety of instruments such as Zero Coupon Zero Principal Bonds, Development Impact Bonds, Social Impact Bonds, etc for issuance and listing on SSE. SEBI has notified ZCZP as eligible security for registration on Social Stock Exchange. These are issued for raising funds for a particular project. The outcome of the project will be evaluated by the social auditor. 

NSDC is now registered with SSE Platform of both National Stock Exchange, Bombay Stock Exchange and is eligible to raise funds on its SSE platform. It will soon be listing an instrument on SSE for specific Skilling Projects.

NSDC Funded Affiliation - Overview

• We aim to catalyse the creation of sustainable and quality skills training institutions across the country.
• Our mission includes supporting and coordinating private sector initiatives for skill development through appropriate Public Private Partnership models. We strive for significant operational and financial involvement from the private sector.
• We play the role of a ‘market maker’ by bring financing to sectors where mechanisms are weak or missing.
• Our focus is on prioritising initiatives that can have multiplier or catalytic effect on the capacity and quality of skilling in India.

Our comprehensive quality assurance framework spans the entire skill development ecosystem, driving measurable improvements through evidence-based approaches. The Quality Assurance serves as the cornerstone of excellence within the National Skill Development ecosystem, implementing a comprehensive framework that ensures all programs meet rigorous quality standards.
Our division integrates specialized sub-divisions: Standards, Accreditation and Affiliation, and Monitoring Evaluation & Learning to create a holistic quality management system. Through our Standards sub-division, we facilitate collaboration between government, academia, and industry to develop and implement NSQF-aligned competency frameworks that serve as the foundation for quality training delivery. These standards establish a common skills language that enhances labour market efficiency and ensures training relevance.
Our quality assurance interventions drive measurable improvements in training outcomes by implementing evidence-based approaches to program design, delivery, and evaluation. We maintain a balance between compliance and innovation, establishing clear benchmarks while encouraging continuous improvement and adaptation to emerging industry needs.