How to apply for a Skill Loan to enrol in skill development courses

Are you trying to get a loan to enrol in skill development courses/ programmes, but are unsure of which bank to go to? What if we told you that certain banks offer skill loans to students who want to enrol in the courses under the Skill Loan Scheme? 

To make it easier for students to enrol in skill development courses and receive institutional credit, the Government of India came up with a Skill Loan Scheme.

Students must follow the National Occupations Standards (NOS) and Qualification Packs (QPs) and complete programmes leading to degrees, diplomas, or certificates that are acknowledged by the National Skill Qualification Framework (NSQF) to be qualified for the programme.

This programme covers all banks that are members of the Indian Banks’ Association (IBA), in addition to any other banks or financial organisations that the RBI may advise. The scheme gives the banks general guidelines for implementing the skilling loan plan. So far, 6,018 persons had benefited from the Skill Loan Scheme since it began six years ago, and as of October 31, 2021, Rs. 64.37 crores had been granted.

Recently, National Skill Development Corporation (NSDC) has also collaborated with Avanse Financial Services and Auxilo Finserve to provide financial solutions for young people’s skill requirements. Students who would like to enrol in skill development and vocational courses can receive financial aid from the NSDC.

Benefits of Skill Loan Scheme

• Loans for students pursuing technical courses offered by training institutes, polytechnics etc.
• No processing charges
• No documentation charges
• No security required

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

Click here to know more about the banks offering Skill Loan Scheme:

Canara bank – https://canarabank.com/User_page.aspx?othlink=391

State Bank of India – https://sbi.co.in/web/personal-banking/loans/education-loans/skill-loan-scheme

Prerequisites to apply for a skill loan

Eligibility Criteria for Skill Loan Scheme 

• Should be an Indian National
• Secure admission to a course that is conducted by any one of the following institutions Industrial Training Institutes (ITIs) and 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, NSDC, State Skill Missions, or State Skill Corporations

Courses: Courses run by Training Institutes aligned to NSQF shall be covered by the Skill Loan. There is no minimum course duration.

Finance Value: Students enrolled in skill training programmes run by Central or State government-recognised organisations that offer NSQF or NSDC-approved courses may be eligible for loans ranging from 5,000 to 1.5 lakh.

Interest Rate: Base rate/MCLR of the bank + add-on of up to 1.5%

Minimum Age: There is no specific restriction concerning the age of the student to be eligible for a skill loan. However, suppose the student is a minor, while the parent executes documents for the loan, in that case, the bank will obtain a letter of acceptance/ratification from them upon attaining a majority.

Security:

• There is no requirement for collateral or a guarantee from a third party. Loans are required to be covered by the CGFSSL scheme.
• In addition to the student serving as co-borrower, the parent must sign the loan documentation.

Repayment of skill loans

For all the banks, repayment of skill loans up to Rs. 50,000 and above- up, the loan must be repaid within 3-5 years and for loans above 1 lakh, it must be repaid within 7 years.

The fees for the course will be paid directly to the educational institution under the Skill Loan Scheme. The covered costs include course or tuition fees, a caution deposit, the cost of buying books, equipment, and supplies, as well as examination fees, library fees, laboratory fees, and any other reasonable costs determined to be required for passing the course.