Skill Loan Scheme: A Detailed Guide 2023

The Skill Loan Scheme was launched in July 2015 to provide individuals with institutional credit for skill development courses aligned with 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 programme applies to all member banks of the Indian Banks’ Association (IBA) as well as any additional banks and financial organisations that the RBI may recommend. The scheme gives banks wide instructions for implementing the skilling loan scheme. Read to know the eligibility criteria, features, documents required and much more.

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Features of the Scheme

The Skill Loan Scheme is described in detail below:

• Course Length – There is no minimum course length.
• Finance Quantum:
  • The minimum loan amount is Rs.5000.
  • The maximum loan amount is Rs.1.5 lakh.
• Interest Rate: The bank’s base rate/MCLR plus a 1.5% add-on.
• Fees for processing: Nil
• Nil margin
• Moratorium Period:
  • Courses lasting less than a year: 6 months after completing the course
  • Courses lasting more than a year: 12 months from course completion
• Repayment Period – 3 to 7 years, depending on the loan amount as follows:
  • 3 years: up to Rs.50,000
  • 5 years between Rs.50,000 and Rs.1 lakh
  • More than Rs.1 lakh: 7 years
• There is no collateral.

Must Read: Education Loan for Diploma Course in India

Benefits of the Skill Loan Scheme

The benefits of taking a loan under the skill loan scheme are listed below:

• Loans for students taking technical courses at training institutes, polytechnics, and so on.
• There are no processing fees.
• There are no documentation fees.
• There is no need for security.

List of Expenses Covered

The course fees will be paid directly to the educational institute under the Skill Loan Scheme. Among the expenses covered are the following:

• Tuition or course fees
• Deposit for caution
• The cost of study resources like books, devices, and equipment
• Examinee fees
• Fees for assessments
• Library charges
• Laboratory charges

Banks can apply to the NCGTC for credit guarantees against defaults, and the NCGTC will issue this guarantee for a modest cost of no more than 0.5% of the outstanding amount. The guarantee will cover up to 75% of the outstanding loan amount (including interest, if applicable).

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Eligibility Criteria

Individuals who are qualified for the Skill Loan Scheme must be enrolled in a course offered by any of the following institutions:

• ITIs (Industrial Training Institutes)
• Polytechnics 
• Schools recognised by the State or Central Board of Education 
• Training partners affiliated with Sector Skill Councils, National Skill Development Corporations (NSDC), State Skill Mission, or State Skill Corporation

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Documents Required

To apply for the Skill Loan Scheme, you must have the following documents:

• Proof of course admission, such as an admission or offer letter and, if available, an ID card
• Copies of scholarship or free-ship letters
• Expense schedule for the course
• Mark sheets for 10th, 12th, and graduation (if applicable), as well as entrance exam results
• Gap certificate, if appropriate (student self-declaration if there has been a gap in study)
• Asset-Liability for loans beyond Rs.7.5 lakh, a statement from the co-applicant or guarantor is required.
• Photographs of the student/parent/co-borrower/guarantor in passport size are required.

Income Proof

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

Address and Identity Proof

One self-attested copy of each of the following documents:

• Passport 
• Driving Licence 
• Proof of Aadhaar Number Possession
• NREGA-issued job card.
• Voter identification Card
• A letter issued by The National Population Register with address information.

Must Read: Documents Required for Education Loan

Application Process

Interested candidates should register on the Vidya Kaushal website. 

• Documents necessary- including but not limited to, evidence of identity, proof of address, proof of income (of self or guardian, if available), and proof of citizenship.
• Following successful registration, candidates can choose their chosen sector/role/centre.
• Counselling is available at the centre of your choice.
• If necessary, submit a loan request through the centre.
• Based on your preferences, evaluate and accept or reject loan offers.
• Following confirmation, the loan is disbursed directly to the partner/centre.

Banks Offering Skill Loan Scheme

• Bank of Maharashtra
• Central Bank of India
• Bank of Baroda
• State Bank of India
• Union Bank of India
• Canara Bank
• Punjab and Sind Bank
• IDBI Bank
• Bank of India
• Karnataka Bank

Must Read: List of nationalised banks in India

Repayment of Loan

All banks require payback of talent loans up to Rs. 50,000 and more within 3-5 years, and repayment of loans beyond Rs. 1 lakh within 7 years. The course fees will be paid directly to the educational institution through the Skill Loan Scheme. 

FAQs

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