The Government of India launched the Skill Loan Scheme in July 2015 to provide institutional credit to individuals who want to pursue skill development courses. These courses are aligned with National Occupations Standards (NOS) and Qualification Packs (QPs) and lead to certificates, diplomas, or degrees by recognized training institutes under the National Skill Qualification Framework (NSQF). The scheme plays a crucial role in enabling youth to access quality training without worrying about financial constraints.
This article provides a detailed overview of the Skill Loan Scheme, its eligibility, features, benefits, application process, and frequently asked questions. The content is SEO-friendly and structured for easy navigation for our readers at mygovscheme.com.
Objective of the Skill Loan Scheme
The Skill Loan Scheme aims to make skill development training affordable and accessible to individuals. With the growing demand for skilled professionals in India and abroad, the scheme ensures that financial barriers do not prevent students from acquiring the required training.
It covers short-term and long-term courses, providing loans up to ₹1.5 lakh without the requirement of collateral. The loan repayment terms are flexible, making it easier for students to repay once they secure employment.
Key Features of the Skill Loan Scheme
The Government of India has provided broad guidelines to banks for operationalizing this scheme. Below are the important features:
1. Eligibility Criteria
Any individual can apply for the loan if they have secured admission in one of the following:
- Industrial Training Institutes (ITIs)
- Polytechnics
- Schools recognized by Central or State Education Boards
- Colleges affiliated with recognized universities
- Training partners affiliated to National Skill Development Corporation (NSDC)
- Sector Skill Councils (SSC)
- State Skill Missions
- State Skill Corporations
2. Courses Covered
- All courses that are aligned with NSQF are eligible.
- There is no minimum duration required for the course.
3. Quantum of Finance
- Minimum Loan: ₹5,000
- Maximum Loan: ₹1,50,000
4. Rate of Interest
- The rate of interest is linked to the bank’s Marginal Cost of Lending Rate (MCLR) plus an additional spread (up to 1.5%).
5. Moratorium Period
- The moratorium covers the entire duration of the course. This means the student does not need to repay during the training period.
6. Repayment Period
Repayment is structured based on the loan amount:
- Loans up to ₹50,000 → Repayment within 3 years
- Loans between ₹50,000 to ₹1 lakh → Repayment within 5 years
- Loans above ₹1 lakh → Repayment within 7 years
7. Coverage of Expenses
The scheme covers:
- Course fees (paid directly to the training institute)
- Examination fees
- Assessment charges
- Cost of study materials
- Other expenses required for successful course completion
8. Collateral-Free Loan
- The Skill Loan Scheme does not require collateral security, making it easily accessible to students from all economic backgrounds.
9. Credit Guarantee Fund for Skill Development (CGFSSD)
- Introduced in November 2015
- Managed by the National Credit Guarantee Trust Company (NCGTC)
- Provides a guarantee cover of up to 75% of the outstanding loan amount (including interest)
- Banks can claim this cover at a nominal fee (not exceeding 0.5% of the loan amount)
Benefits of the Skill Loan Scheme
The Skill Loan Scheme provides multiple benefits to students:
- Affordable Education: Loan up to ₹1.5 lakh makes skill training accessible.
- Wide Course Coverage: All NSQF-aligned courses are eligible.
- Collateral-Free Loan: No security deposit or guarantor required.
- Flexible Repayment: Repayment tenure ranges from 3 to 7 years.
- Moratorium Period: Students start repayment only after completing the course.
- Support for Skill India Mission: Aligns with the vision of a skilled India.
Application Process for Skill Loan Scheme
The application process is designed to be simple and student-friendly.
1: Registration
- Candidates must register on the Vidya Kaushal Portal.
2: Documentation
- Submit necessary documents such as:
- Proof of Identity (Aadhaar, PAN, Voter ID, Passport)
- Proof of Address (Utility bill, Aadhaar, Passport)
- Proof of Income (of self or guardian, if available)
- Admission letter from the training institute
3: Selection of Course & Training Center
- After registration, candidates can select their preferred sector, role, and center.
4: Counselling
- Visit the selected training center for counselling and guidance.
5: Loan Request
- Raise a loan request through the training center if financial assistance is needed.
6: Loan Offer Evaluation
- Banks will evaluate and provide loan offers.
- Candidates can accept or reject offers based on preference.
7: Disbursement
- The loan amount is disbursed directly to the training partner/institute after confirmation.
Documents Required
Students need to provide the following documents (not exhaustive):
- Identity Proof: Aadhaar, PAN Card, Voter ID, Passport
- Address Proof: Aadhaar, Driving License, Passport, Utility Bill
- Income Proof: Salary slip, ITR, or income certificate (if available)
- Admission Proof: Admission letter or enrollment confirmation from training institute
- Passport Size Photographs
Performance of the Scheme
As per the Indian Banks’ Association (IBA), 21 banks disbursed ₹29.06 crore under the Skill Loan Scheme during 2018-19 (up to September 2018). This shows the growing importance of the scheme in financing skill development courses.
Frequently Asked Questions (FAQs)
1. What is the maximum loan one can avail under the scheme?
Students who meet the eligibility criteria can avail a loan amount up to ₹1,50,000.
2. What is MCLR under the rate of interest?
MCLR (Marginal Cost of Lending Rate) is the minimum lending rate below which banks are not permitted to lend. It varies from bank to bank.
3. What is the moratorium period?
The moratorium period is the course duration, during which the borrower does not have to make any repayment. EMI starts only after the course completion.
4. Do I need to provide collateral for the loan?
No, the Skill Loan Scheme is collateral-free. Students do not need to pledge any security.
5. How is the loan amount disbursed?
The loan is disbursed directly to the training institute for payment of fees and other course-related expenses.
6. Can working professionals also apply for the Skill Loan Scheme?
Yes, working professionals who wish to enhance their skills through NSQF-aligned courses are also eligible.
Internal Linkages for Better Understanding
To know about other government education and employment-related schemes, you may also like:
- PM Kaushal Vikas Yojana (PMKVY)
- PM Mudra Loan Yojana
- National Apprenticeship Promotion Scheme (NAPS)
Conclusion
The Skill Loan Scheme is a major initiative under the Skill India Mission to support youth in acquiring employable skills. By offering collateral-free loans up to ₹1.5 lakh with flexible repayment, the scheme ensures that financial barriers do not restrict skill development. With growing opportunities in India and abroad, this scheme is a boon for individuals aspiring for a better career through skill training.
If you are planning to enroll in a skill development course, applying under the Skill Loan Scheme can be your first step towards a successful career.
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50000 ₹ lone amount