Launched in July 2015, the Skill Loan Scheme provides institutional credit to individuals for skill development courses aligned with National Occupations Standards and Qualification Packs. The scheme aims to offer financial assistance for courses leading to a certificate, diploma, or degree, fostering skill development aligned with the National Skill Qualification Framework (NSQF).
Applicability:

The scheme is applicable to all member banks of the Indian Banks’ Association (IBA) and other banks and financial institutions advised by the RBI.

Salient Features and Guidelines: Rate of Interest:

The interest rate is calculated based on the Base rate (MCLR) plus an add-on, typically up to 1.5%.

Moratorium:

The moratorium period is aligned with the duration of the course.

The repayment period varies between 3 to 7 years, depending on the loan amount:

Loans up to ₹50,000: Up to 3 years

Loans between ₹50,000 to ₹1 lakh: Up to 5 years

Loans above ₹1 lakh: Up to 7 years

Coverage:

The loan covers course fees (directly paid to the training institute) and expenses related to course completion, including assessment, examination, study material, etc.

Collateral:

No collateral is required from the beneficiary.

Credit Guarantee Fund for Skill Development (CGFSSD):

Administered by the National Credit Guarantee Trust Company (NCGTC).

Banks can apply to NCGTC for credit guarantees against defaults.

Guarantee cover is provided for up to 75% of the outstanding loan amount.