Skill Loan Scheme

Introduction

The Skill Loan Scheme, launched in July 2015, aims to promote skill development and vocational training among individuals by providing them with institutional credit to pursue courses that align with the National Occupations Standards and Qualification Packs. These courses should lead to certificates, diplomas, or degrees recognized under the National Skill Qualification Framework (NSQF).

How the Skill Loan Scheme Works

The Skill Loan Scheme in India is implemented by banks that are members of the Indian Banks’ Association (IBA) and other financial organizations authorized by the Reserve Bank of India (RBI).

Skill Loan Scheme Details

Here are the details of the Skill Loan Scheme:

• Objective: To provide institutional credit to individuals for skill development courses aligned to National Occupations Standards and Qualification Packs, leading to a certificate/diploma/degree under the National Skill Qualification Framework (NSQF).
• Eligibility: Individuals who wish to pursue skill development courses aligned with NSQF standards.
• Duration of Course: No minimum duration.
• Quantum of Finance:
  • Minimum loan amount: Rs. 5000
  • Maximum loan amount: Rs. 1.5 lakh
• Interest Rate: Base rate/MCLR of the bank + add-on of up to 1.5%
• Processing Fees: Nil
• Margin: Nil (No collateral required)
• Moratorium:
  • Courses below 1-year duration: 6 months from course completion
  • Courses above 1 year duration: 12 months from course completion
• Repayment Period:
  • Up to Rs. 50,000: 3 years
  • Between Rs. 50,000 to Rs. 1 lakh: 5 years
  • Above Rs. 1 lakh: 7 years
• Collateral: None (No security or collateral required for availing the loan)

How to Apply for the Skill Loan Scheme

• Identify eligible skill development courses aligned with NSQF.
• Choose a bank offering the Skill Loan Scheme.
• Gather necessary documents (ID, address proof, course admission letter, etc.).
• Visit the bank and fill out the loan application form.
• If the application is successful, the bank will release the sanctioned loan amount.
• During the moratorium period, no repayments are required.
• Repay the loan as per the agreed-upon schedule after the moratorium period.

List of Expenses Covered

Under this Scheme, the following expenses are covered:

• Course or Tuition Fees
• Caution Deposit
• Cost of Study Materials (books, instruments, equipment)
• Examination Fees
• Assessment Fees
• Library Fees
• Laboratory Fees

Eligibility Criteria for Skill Loan Scheme

The eligibility criteria for this Scheme typically require individuals to have secured admission to a skill development course conducted by any of the following institutions:

• Industrial Training Institutes (ITIs)
• Polytechnics
• Schools certified by the State or Central Board of Education.
• Colleges affiliated with a recognized university
• Training partners affiliated with Sector Skill Councils, National Skill Development Corporation (NSDC), State Skill Mission, or State Skill Corporation

Documentation Required for Applying to Skill Loan Scheme

To apply for the Skill Loan Scheme, applicants need to submit the following documents:

• Proof of Admission: Admission or offer letter and student ID card (if available) confirming enrollment in the skill development course.
• Scholarship/Fee Waiver Letter: Copies of any scholarship or free-ship letters, if applicable.
• Course Expense Schedule: A document outlining the expenses related to the skill development course.
• Academic Records: Mark sheets of 10th, 12th, graduation (if applicable), and results of any entrance exams, if relevant.
• Gap Certificate (if applicable): A self-declaration from the student explaining any gaps in their academic studies.
• Asset-Liability Statement (for loans above Rs.7.5 lakh): Provided by the co-applicant or guarantor.
• Passport Size Photographs: Photographs of the student, parent, co-borrower, or guarantor.
• Proof of Income:
  • Bank account statements of the last six months for the parent, guarantor, or guardian
  • PAN card of the student, parent, guarantor, or co-borrower.
  • Aadhaar Card: Proof of Aadhaar number (if eligible for government interest subsidy schemes).
• Proof of Address and Identity:
  • One self-attested copy of documents such as
  • Passport
  • Driving license
  • Aadhaar card
  • Voter’s identity card
• Job card issued by NREGA or letter from the National Population Register with address details.

Features and Benefits of Skill Loan Scheme

Any skill loans sanctioned on or after July 15, 2015, will be covered by the Credit Guarantee Fund for Skill Development (CGFSSD), which will be managed by the National Credit Guarantee Trust Company (NCGTC).

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