The Skill Loan Scheme was launched in July 2015 to provide individuals with institutional credit for skill development courses aligned to National Occupations Standards and Qualification Packs and leading to a certificate/diploma/degree by training institutes in accordance with the National Skill Qualification Framework (NSQF).


This scheme applies to all member banks of the Indian Banks' Association (IBA) as well as any other banks and financial institutions that the RBI may recommend. The scheme gives banks broad guidelines for implementing the killing loan scheme.

I. Introduction to Skill Loan Scheme

A. Definition of Skill Loan Scheme

B. Purpose of Skill Loan Scheme

C. Salient features of the guidelines to banks for working to achieve the scheme:

II. Eligibility for Skill Loan Scheme

A. Age criteria

B. Educational Qualification

C. Income criteria

III. Benefits of Skill Loan Scheme

A. Low-Interest Rates

IV. How to apply for Skill Loan Scheme

A. Online application process

B. Required Documents

C.Sources And References



I. Introduction to Skill Loan Scheme

The Skill Loan Scheme is a government-led initiative aimed at providing financial support to individuals who wish to upgrade their skills and improve their employ ability. The scheme is designed to make education and training more accessible and affordable for people from all walks of life.

A. Definition of Skill Loan Scheme

The Skill Loan Scheme is a government-led initiative aimed at providing financial support to individuals who wish to upgrade their skills and improve their employ ability. The scheme provides low-interest loans to eligible individuals to pay for education or training programs, with the goal of helping them acquire new skills, increase their earning potential, and secure better job opportunities. The Skill Loan Scheme is designed to make education and training more accessible and affordable, particularly for people from disadvantaged backgrounds who may not have the financial resources to pay for training.

B. Purpose of Skill Loan Scheme

The purpose of the Skill Loan Scheme is to provide individuals with the financial support they need to upgrade their skills and improve their employ ability. The scheme is designed to address the skills gap that exists in many industries and help individuals to secure better-paying jobs. The ultimate goal of the Skill Loan Scheme is to promote lifelong learning and career development, and to support individuals in achieving their career goals and aspirations.

By providing access to education and training programs, the Skill Loan Scheme aims to equip individuals with the knowledge and skills they need to succeed in today's rapidly changing job market. The scheme also aims to support the development of new and emerging industries, by providing individuals with the opportunity to acquire the skills they need to enter these fields.

In addition to supporting individuals, the Skill Loan Scheme also benefits society as a whole by promoting economic growth and development. By investing in the skills and knowledge of its citizens, a country can create a more highly skilled and competitive workforce, which can drive economic growth and create new job opportunities.


Salient features of the guidelines to banks for operationalizing the scheme:

  • Eligibility –Any individual who has secured admission in a course run by Industrial Training Institutes (ITIs), Polytechnics or in a school recognized by Central or State education Boards or in a college affiliated to a recognized university, training partners affiliated to National Skill Development Corporation (NSDC) / Sector Skill Councils, State Skill Mission, State Skill Corporation
  • Courses – Aligned to NSQF
  • Quantum of Finance – Rs 5000-1,50,000
  • Duration of Course – No minimum duration
  • Rate of Interest – Base rate (MCLR) + an add on typically up to 1.5%
  • Moratorium – Duration of the course
  • Repayment Period – Between 3 to 7 years basis the amount of loan
  • Loans upto ₹ 50,000 - Upto 3 years
  • Loans between ₹ 50,000 to ₹ 1 lakh - Upto 5 years
  • Loans above ₹ 1 lakh - Upto 7 years
  • Coverage – Course Fees (directly to the training institute) along with expenses towards completion of the course (assessment, examination, study material, etc.)
  • The scheme does not allow for a collateral to be charged from the beneficiary.

MSDE, through a November 2015 notification, brought into force the Credit Guarantee Fund for Skill Development (CGFSSD) for all skill loans sanctioned on or after 15 July 2015, to be administered by the National Credit Guarantee Trust Company (NCGTC).

Banks can apply to the NCGTC for credit guarantee against defaults and NCGTC will provide this guarantee at nominal fee which shall not exceed 0.5% of the amount outstanding. The guarantee cover will be for a maximum of 75% of the outstanding loan amount (including interest, if any).


As per the information provided by Indian Bank’s Association (IBA) in respect of 21 Banks, a total skill loan of Rs 29.06 crore was disbursed during the year 2018-19 (as on September 2018).



II. Eligibility for Skill Loan Scheme


A student who has secured admission in a course run by Industrial Training Institutes (ITIs), Polytechnics or in a school recognized by Central or State education Boards or in a college affiliated to a recognized university, training partners affiliated to National Skill Development Corporation (NSDC) / Sector Skill Councils, State Skill Mission, State Skill Corporation


A. Age criteria

The age criteria for eligibility for the Skill Loan Scheme can vary depending on the specific program and the country in which it is being offered. In general, most programs are open to individuals of all ages, although there may be age restrictions for certain types of education or training.

For example, in some cases, the Skill Loan Scheme may be limited to individuals under a certain age, such as 25 or 30 years old, in order to prioritize support for younger people who are just starting their careers. In other cases, there may be no age restrictions, and the scheme may be open to individuals of any age who are interested in upgrading their skills.

It is important to check the eligibility criteria for the specific Skill Loan Scheme you are interested in, as the requirements can vary depending on the program. Additionally, some programs may have specific age requirements related to the type of skills being developed or the industry the individual wants to enter.

B. Educational Qualification

The educational qualification required to be eligible for the Skill Loan Scheme can vary depending on the specific program and the type of education or training being pursued. In general, most programs require at least a high school diploma or equivalent, although some programs may require a higher level of education.

For example, some programs may require a bachelor's degree for admission, while others may accept individuals who have completed a vocational training program or have relevant work experience. In some cases, the Skill Loan Scheme may also be available to individuals who have dropped out of high school or who have not completed their secondary education.

It is important to check the eligibility criteria for the specific Skill Loan Scheme you are interested in, as the requirements can vary depending on the program. Additionally, some programs may have specific educational requirements related to the type of skills being developed or the industry the individual wants to enter.


C. Income criteria

The income criteria for eligibility for the Skill Loan Scheme can vary depending on the specific program and the country in which it is being offered. In general, the Skill Loan Scheme is designed to help individuals who may not have the financial resources to pay for education or training, and as such, most programs have income restrictions.

For example, in some cases, the Skill Loan Scheme may be limited to individuals who earn below a certain threshold, such as the national median income. In other cases, there may be no specific income restrictions, and the scheme may be open to individuals of all income levels who are interested in upgrading their skills.

It is important to check the eligibility criteria for the specific Skill Loan Scheme you are interested in, as the requirements can vary depending on the program. Additionally, some programs may have specific income requirements related to the type of skills being developed or the industry the individual wants to enter. The income criteria may also be used to determine the amount of loan that an individual is eligible to receive.



III. Benefits of Skill Loan Scheme

  • Courses  :-Aligned to NSQF
  • Quantum of Finance :- Rs 5000-1,50,000
  • Duration of Course :- No minimum duration
  • Rate of Interest :- Base rate (MCLR) + an add on typically up to 1.5%
  • Moratorium :- Duration of the course
  • Repayment Period :- Between 3 to 7 years basis the amount of loan

Loan

  • Loans upto ₹ 50,000 - Upto 3 years
  • Loans between ₹ 50,000 to ₹ 1 lakh - Upto 5 years
  • Loans above ₹ 1 lakh - Upto 7 years


Coverage 

Course Fees (directly to the training institute) along with expenses towards completion of the course (assessment, examination, study material, etc.)
The scheme does not allow for a collateral to be charged from the beneficiary.


MSDE, through a November 2015 notification, brought into force the Credit Guarantee Fund for Skill Development (CGFSSD) for all skill loans sanctioned on or after 15 July 2015, to be administered by the National Credit Guarantee Trust Company (NCGTC).


Banks can apply to the NCGTC for credit guarantee against defaults and NCGTC will provide this guarantee at nominal fee which shall not exceed 0.5% of the amount outstanding. The guarantee cover will be for a maximum of 75% of the outstanding loan amount (including interest, if any).


IV. How to apply for Skill Loan Scheme

Interested candidates need to register on the Vidya Kaushal portal

  1. Documents required– including, but not limited to proof of identity, proof of address, proof of income (of self or guardian, if available)
  2. Post successful registration, candidate can select their preferred sector/ role/ centre
  3. Visit the centre of your choice for counselling
  4. Raise loan request through the centre, if required
  5. Evaluate and accept/ reject loan offers based on preference
  6. Disbursement of the loan directly to partner/ center post-confirmation

Documents Required

Documents required– including, but not limited to proof of identity, proof of address, proof of income (of self or guardian, if available)

Sources And References