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Skill Loan Scheme

The Skill Loan scheme was launched by the Government of India to facilitate institutional credit for students who wish to study for skill development courses. The courses that are applicable for the scheme are those that adhere to the standards of the National Occupations Standards and Qualification Packs and which result in a degree, diploma, or certificate that is recognised by the National Skill Qualification Framework (NSQF).

How the Skill Loan Scheme Works

This scheme can be offered by banks that are members of the Indian Banks’ Association (IBA). Other financial institutions that are permitted by the Reserve Bank of India (RBI) to offer it may also do so.

Skill Loan Scheme Details

Given below are details of the Skill Loan Scheme:

  • 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
  • Moratorium:
    • Courses with less than 1-year duration: 6 months from course completion
    • Courses above 1 year duration: 12 months from course completion
  • Repayment Period – Between 3 to 7 years based on the quantum of loan as follows:
    • 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

How to Apply for the Skill Loan Scheme

You can apply for the Skill Loan Scheme through any of the banks that are offering the scheme.

List of Expenses Covered

Under the Skill Loan Scheme, the fees for the course will be paid directly to the educational institute. The expenses that are covered include the following:

  • Course or tuition fees
  • Caution deposit
  • Cost of the study materials such as books, instruments, and equipment
  • Examination fees
  • Assessment fees
  • Library fees
  • Laboratory fees

Eligibility Criteria for Skill Loan Scheme

Individuals who are eligible for the Skill Loan Scheme should have secured admission to a course that is conducted by any one of the following institutions:

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

Documents Required to apply for the Skill Loan Scheme

The following documents are required to apply for the Skill Loan Scheme:

  • Proof of admission to course such as admission or offer letter and ID card if available
  • Copies of letter for scholarship or free-ship
  • Schedule of expenses for course
  • Mark sheet of the 10th, 12th, graduation (if applicable), and results of the entrance exam
  • Gap certificate, if applicable (self-declaration from the student if there has been a gap in studies)
  • Asset-Liability Statement of the co-applicant or guarantor for loans above Rs.7.5 lakh
  • Passport size photographs of the student/parent/co-borrower/guarantor

Proof of income:

  • Bank account statements of the last six months of the parent, guarantor, or guardian
  • Permanent Account Number (PAN) of the student, parent, guarantor, or co-borrower
  • Aadhaar (if eligible for government interest subsidy schemes)

Proof of address and identity:

  • One self-attested copies of the documents given below:
  • Passport
  • Driving license
  • Proof of possession of Aadhaar Number
  • Voter's Identity Card
  • Job card issued by NREGA
  • Letter issued by the National Population Register with details of address

Features and Benefits of Skill Loan Scheme

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

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