Skill Loan Scheme:
economy
The 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.
What’s in the news?
- Launch
Date: July 2015
- Purpose: To provide
institutional credit to individuals pursuing skill development courses
aligned with National Occupation Standards and Qualification Packs (NOS
and QPs).
- Target: Courses
conducted by training institutes following the National Skill
Qualification Framework (NSQF), leading to certifications, diplomas, or
degrees.
Eligibility:
Who Can Apply:
- Any
Indian national with admission in a recognized course at:
- Industrial Training Institutes (ITIs)
- Polytechnics
- Schools recognized by Central or
State Education Boards
- Colleges affiliated with recognized
universities
- Training partners affiliated with the
National Skill Development Corporation (NSDC), Sector Skill Councils,
State Skill Missions, or State Skill Corporations.
Age Restriction: None
Features:
- Courses: Must be
aligned with NSQF.
- Course
Duration: No minimum
duration.
- Quantum
of Finance: Initially Rs.
5,000 to Rs. 1,50,000, now increased to Rs. 7.5 lakh.
- Moratorium
Period: Duration of
the course.
- Repayment
Period:
- Loans
up to Rs. 50,000: Up to 3 years.
- Loans
between Rs. 50,000 to Rs. 1 lakh: Up to 5 years.
- Loans
above Rs. 1 lakh: Up to 7 years.
- Coverage: Includes
course fees, assessment, examination, study materials, etc.
- Interest
Rate: Should not
exceed 1.5% per annum over the repo-linked lending rate (RLLR) or other
external benchmark rates as per RBI guidelines.
- Collateral: No collateral
required from the beneficiary.
Credit Guarantee Fund:
- Purpose: To facilitate
access to credit for skill development and enhance employability.
- Support: Backed
by a credit guarantee scheme to reduce risk for lenders and increase
access to loans for borrowers.
Credit Guarantee Fund for Skill
Development (CGFSSD):
- Implemented
by the Ministry of Skill Development and Entrepreneurship (MSDE) through a
notification in November 2015.
- Administered
by the National Credit Guarantee Trust Company (NCGTC).
Guarantee Coverage:
- Banks
can apply for a credit guarantee against defaults.
- NCGTC
provides this guarantee at a nominal fee (up to 0.5% of the outstanding
amount).
- Guarantee
cover is up to 75% of the outstanding loan amount (including interest)