Skill Loan Scheme:
The Union Finance Minister recently announced a revision to the model skill loan scheme, which will now facilitate loans up to Rs 7.5 lakh backed by a guarantee from a government-promoted fund.
- Skill Loan Scheme was introduced in July, 2015, to offer institutional credit to individuals pursuing skill development courses aligned with National Occupations Standards and Qualification Packs.
- These courses are conducted by training institutes following the National Skill Qualification Framework (NSQF) and lead to certifications, diplomas, or degrees.
- The Scheme applies to all member banks of the Indian Banks’ Association (IBA) and other banks and financial institutions as advised by the Reserve Bank of India (RBI).
- Any Indian National who has secured admission in a course run by Industrial Training Institutes (ITIs), Polytechnics, or in a school recognised by Central or State Education Boards or in a college affiliated with a recognised university, training partners affiliated to National Skill Development Corporation (NSDC) Sector Skill Councils, State Skill Mission, or State Skill Corporation can avail loan for the purpose.
- No specific restriction with regard to age.
- Courses: Aligned with NSQF.
- The scheme does not allow for collateral to be charged from the beneficiary.
- Ministry of Skill Development and Entrepreneurship (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).
- Banks can apply to the NCGTC for a credit guarantee against defaults, and the NCGTC will provide this guarantee at a 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).
