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Industry chamber CII has suggested the setting up of a Skill
Development Bank (SDB) as a financial intermediary between
commercial banks and potential trainees to overcome the shortage of
required skills in the economy. Special attention needs to be paid
to availability of finance for potential trainees as also for the
skill development infrastructure, CII said in a statement
recently. "The manufacturing and services sectors find
themselves saddled with the problem of non-availability of skilled
workforce. This could prove to be a binding constraint in the way of
sustaining high growth rate in the long run," it said. The ITI
and vocational training system is throwing up diploma holders whose
skills are not commensurate with the requirements of the industry
today, CII said. According to the suggested model, a dedicated SDB
would also extend loans to private players looking at setting up new
institutes or upgrading existing ones. Lending by commercial banks
to the SDB would be taken as part of banks' priority sector-lending
targets, it added. "In order to reduce the risk of default,
the SDB would lend money for training directly to the institute in
question, where the trainee would be inducted. On completion of
course, the original diploma certificate would be directly handed
over by the institute to the SDB, which would hold this as a
collateral for the trainee in question," suggests the CII
model. After successful completion of the training and
subsequently the trainee joining a company, the certificate would be
transferred from the Bank to the company directly, with an
arrangement that the company would settle the loan on behalf of the
trainee in easy instalments. The CII also suggested a concessional
interest rate of 7 per cent for such loans. Currently, loans for
higher education are available at interest rates in the range of
10.5 to 11.5 per cent. As regards funding of the SDB, the CII said
this initiative would have to be largely government funded for the
time being and, therefore, such an institution would have to be
created under an Act of the Parliament. The government funds would
be supplemented by commercial banks parking some of their funds with
the SDB once skill development is made a part of priority sector
lending target. "This model would automatically ensure
competition among the institutes to improve their quality in terms
of imparting the skills and educations, as the SDB would be required
to rate the institutes receiving funds from the Bank," CII
said.
NIIT foray into insurance
training soon IT training company NIIT , which started
a course in banking in partnership with private sector banking giant
ICICI Bank last year, now plans to foray into the insurance training
space in next 6-8 months. "We have just started a course
specific to the need of the banking sector and in another 6-8 months
will start a customised course for the insurance sector as
well," NIIT Ltd Chief Operating Officer P. Rajendran said in
New Delhi recently. Currently, the company is talking with the
insurance industry for formulating the course structure, he
said. The sector is growing at a rapid pace and the industry is
facing a shortage of trained and skilled professionals for both
front and back-end operations, Rajendran said. NIIT is talking to
some life and general insurers to ensure placement to the pass-outs
of the proposed course. After the insurance sector, NIIT intends to
start courses for financial sectors like mutual funds and securities
as well. However, Rajendran said, it was premature to comment on
this as in the current year focus remained on banking and
insurance. The company is also looking at other sectors like the
retail and infrastructure for providing IT-enabled customised
training courses. — PTI
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