The Skill Loan Scheme was launched in July 2015 by the Government of India to provide easy institutional credit to students and individuals who want to pursue skill development courses. The scheme supports courses aligned with the National Skill Qualification Framework (NSQF) and helps learners obtain certificates, diplomas, or degrees that improve employability.
This loan scheme is implemented through all member banks of the Indian Banks’ Association (IBA) and other banks or financial institutions as advised by the Reserve Bank of India (RBI).
Objective of the Skill Loan Scheme
The main objectives of the Skill Loan Scheme are:
- To promote skill development and vocational education
- To make skill courses affordable for students
- To support employment-oriented training programs
- To provide collateral-free loans for skill education
Key Features of the Skill Loan Scheme
Courses Covered
- Courses aligned with NSQF
- Training programs offered by:
- Industrial Training Institutes (ITIs)
- Polytechnics
- Schools recognized by Central or State Education Boards
- Colleges affiliated with recognized universities
- Training partners affiliated with NSDC / Sector Skill Councils
- State Skill Missions or State Skill Corporations
Loan Amount (Quantum of Finance)
- Minimum loan amount: ₹5,000
- Maximum loan amount: ₹1,50,000
Duration of Course
- No minimum course duration is required to apply
Rate of Interest
- Interest rate: Bank’s Base Rate (MCLR) + up to 1.5%
- Exact rate may vary from bank to bank
Moratorium Period
- The moratorium period is equal to the duration of the course
- Repayment starts after completion of the course
Repayment Period
The repayment tenure depends on the loan amount:
- Up to ₹50,000: Repayment up to 3 years
- ₹50,001 to ₹1,00,000: Repayment up to 5 years
- Above ₹1,00,000: Repayment up to 7 years
Coverage Under the Scheme
The loan amount can be used for:
- Course fees (paid directly to the training institute)
- Examination and assessment fees
- Study materials and other course-related expenses
Collateral Requirement
- No collateral or security is required under this scheme
Credit Guarantee Support (CGFSSD)
In November 2015, the Ministry of Skill Development and Entrepreneurship (MSDE) introduced the Credit Guarantee Fund for Skill Development (CGFSSD).
- Applicable to skill loans sanctioned on or after 15 July 2015
- Managed by the National Credit Guarantee Trust Company (NCGTC)
- Banks receive a credit guarantee of up to 75% of the outstanding loan amount
- Guarantee fee charged to banks is up to 0.5% of the outstanding loan amount
Eligibility Criteria for Skill Loan Scheme
An applicant must:
- Have secured admission in an eligible skill course
- Be enrolled in ITI, Polytechnic, recognized school, college, or NSDC-affiliated training partner
- Be an Indian citizen
- Have valid identity and address proof
Application Process for Skill Loan Scheme (Online)
Follow these steps to apply:
Step 1: Register on the Vidya Kaushal Portal
Step 2: Select your preferred sector, role, and training centre
Step 3: Visit the chosen centre for counselling
Step 4: Raise a loan request through the training centre (if required)
Step 5: Review and accept or reject loan offers
Step 6: Loan amount is disbursed directly to the training partner or centre
Documents Required
- Proof of Identity (Aadhaar, PAN, etc.)
- Proof of Address
- Proof of Income (self or guardian, if available)
- Admission or course confirmation letter
- Passport-size photographs
Frequently Asked Questions (FAQs)
What is the maximum loan amount under the Skill Loan Scheme?
The maximum loan amount is ₹1,50,000.
What is MCLR in the interest rate?
MCLR (Marginal Cost of Funds Based Lending Rate) is the minimum interest rate below which banks cannot lend.
What is the moratorium period?
The moratorium period is the course duration, during which repayment is not required.