Skill Loan Scheme

Salient features of the guidelines to banks for operationalizing the scheme:

1. Eligibility –Any individual who has secured admission in a course run by Industrial Training Institutes (ITIs), Polytechnics or in a school recognized by Central or State education Boards or in a college affiliated to a recognized university, training partners affiliated to National Skill Development Corporation (NSDC) / Sector Skill Councils, State Skill Mission, State Skill Corporation
2. Courses – Aligned to NSQF
3. Quantum of Finance – Rs 5000-1,50,000
4. Duration of Course – No minimum duration
5. Rate of Interest – Base rate (MCLR) + an add on typically up to 1.5%
6. Moratorium – Duration of the course
7. Repayment Period – Between 3 to 7 years basis the amount of loan
8. Loans upto ₹ 50,000 – Upto 3 years
9. Loans between ₹ 50,000 to ₹ 1 lakh – Upto 5 years
10. Loans above ₹ 1 lakh – Upto 7 years
11. Coverage – Course Fees (directly to the training institute) along with expenses towards completion of the course (assessment, examination, study material, etc.)
12. The scheme does not allow for a collateral to be charged from the beneficiary.
13. MSDE, through a November 2015 notification, brought into force the Credit Guarantee Fund for Skill Development (CGFSSD) for all skill loans sanctioned on or after 15 July 2015, to be administered by the National Credit Guarantee Trust Company (NCGTC).
14. Banks can apply to the NCGTC for credit guarantee against defaults and NCGTC will provide this guarantee at nominal fee which shall not exceed 0.5% of the amount outstanding. The guarantee cover will be for a maximum of 75% of the outstanding loan amount (including interest, if any).
15. As per the information provided by Indian Bank’s Association (IBA) in respect of 21 Banks, a total skill loan of Rs 29.06 crore was disbursed during the year 2018-19 (as on September 2018).

The scheme is a tribute to the workers in the Unorganized sectors who contribute around 50 per cent of the nation’s Gross Domestic Product (GDP).The applicants between the age group of 18 to 40 years will have to make monthly contributions ranging between Rs 55 to Rs 200 per month till they attain the age of 60.Once the applicant attains the age of 60, he/ she can claim the pension amount. Every month a fixed pension amount gets deposited in the pension account of the respective individual.Voluntary and contributory pension schemesMonthly contribution ranges from Rs.55 to Rs.200 depending upon the entry age of the beneficiary.Under this schemes, 50% monthly contribution is payable by the beneficiary and equal matching contribution is paid by the Central Government.