Skill Loan Scheme

Introduction to the Skill Loan Scheme (कौशल ऋण योजना)

The Skill Loan Scheme, launched by the Ministry of Skill Development and Entrepreneurship in July 2015, is designed to provide financial support to individuals eager to pursue skill development programs. This scheme allows eligible candidates to secure loans of up to ₹1,50,000, enabling them to enroll in courses at accredited training institutes, including Industrial Training Institutes (ITIs) and Polytechnics.

Detailed Overview of the Skill Loan Scheme

The primary aim of the Skill Loan Scheme is to extend institutional credit for skill development courses that comply with the National Occupational Standards and Qualification Packs. Participants in these courses receive certificates, diplomas, or degrees from institutions recognized under the National Skill Qualification Framework (NSQF). The scheme is accessible to all member banks of the Indian Banks’ Association (IBA) and other banks and financial institutions that are authorized by the Reserve Bank of India (RBI), providing a structured framework for effective implementation.

Key Features of the Skill Loan Scheme

• Eligibility: Open to individuals enrolled in courses at ITIs, Polytechnics, schools recognized by Central or State education boards, or colleges affiliated with recognized universities. This includes training partners associated with the National Skill Development Corporation (NSDC) and State Skill Missions.
• Course Alignment: All courses must align with the National Skill Qualification Framework (NSQF).
• Loan Amount: Financial assistance ranges from ₹5,000 to ₹1,50,000.
• Course Duration: No minimum duration is required for the courses.
• Interest Rate: Calculated as the base rate (MCLR) plus an additional charge, typically up to 1.5%.
• Moratorium: The moratorium period corresponds to the duration of the course enrolled.
• Repayment Period: Varies between 3 to 7 years based on the loan amount:
  • Loans up to ₹50,000 – Maximum repayment period of 3 years
  • Loans between ₹50,000 and ₹1 lakh – Maximum repayment period of 5 years
  • Loans exceeding ₹1 lakh – Maximum repayment period of 7 years
• Coverage: The loan covers course fees paid directly to the training institute, along with other expenses such as assessments, examinations, and study materials.
• No Collateral Required: Beneficiaries are not required to provide collateral for the loan.

Credit Guarantee Fund for Skill Development

In November 2015, the Ministry of Skill Development and Entrepreneurship introduced the Credit Guarantee Fund for Skill Development (CGFSSD) for all skill loans approved after July 15, 2015. This fund is managed by the National Credit Guarantee Trust Company (NCGTC). Participating banks can seek a credit guarantee from the NCGTC to cover defaults, with the guarantee provided at a nominal fee not exceeding 0.5% of the outstanding loan amount. The guarantee covers up to 75% of the outstanding loan amount, including any accrued interest. As per reports from the Indian Banks’ Association (IBA), skill loans amounting to ₹29.06 crore were disbursed in the financial year 2018-19 as of September 2018.

Eligibility Criteria

• Applicants must have secured admission in recognized courses at ITIs, Polytechnics, or schools validated by Central or State education boards.
• Enrollment in colleges affiliated with recognized universities or training partners associated with the NSDC, Sector Skill Councils, or State Skill Missions is also acceptable.

Application Process

To apply for the Skill Loan Scheme, follow these outlined steps:

• Online Registration: Candidates must register on the Vidya Kaushal portal.
• Required Documents: Gather necessary documents, including proof of identity, proof of address, and proof of income (from self or guardian).
• Sector Selection: After successful registration, candidates can choose their preferred sector, role, or training center.
• Counseling Visit: Candidates should visit their selected center for counseling.
• Loan Request: Raise a loan request through the center if required.
• Loan Offer Evaluation: Review and either accept or reject loan offers based on personal preferences.
• Disbursement: The loan amount will be disbursed directly to the training partner or center upon confirmation.

Official Source

For comprehensive details about the Skill Loan Scheme, please visit myScheme.gov.in.