Model Skill Loan Scheme

✦Key Features

• Loans available for various skill development courses offered by institutions recognized by the government.
• No collateral required for loans up to a certain limit (e.g., ₹4 lakhs).
• Repayment period starts after a moratorium period (e.g., 6-12 months after course completion/employment).
• Covers tuition fees, examination fees, study material, and other reasonable expenses.
• Implemented through Public Sector Banks (PSBs) and other financial institutions.
• Interest rates linked to the base rate of the lending bank.

✓Eligibility Criteria

• Must be an Indian citizen.
• Must have secured admission in a skill development course offered by an institution recognized by the government/sector skill council.
• Age criteria as per the specific course and bank norms (generally 18-35 years).
• Minimum educational qualification as prescribed for the chosen skill course.

★Benefits

• Access to affordable credit for skill training, reducing financial barriers.
• Increased employability and better job prospects for beneficiaries.
• Empowerment of individuals through skill acquisition and entrepreneurship.
• Contribution to national skill development and economic growth.

▶Application Process

• Applicant approaches a participating Public Sector Bank or financial institution.
• Fills out the loan application form and submits with all required documents.
• Bank verifies the application, documents, and eligibility criteria.
• Upon approval, the loan amount is disbursed to the skill training institution.
• Repayment schedule is agreed upon, starting after the moratorium period.

₹ Budget Allocation

No direct budget allocation; loans are provided by Public Sector Banks and other financial institutions, with government support for interest subvention if applicable.

Funding Ratio (Centre:State): Credit Guarantee provided by the Central Government via NCGTC; Loans disbursed by Commercial, Regional Rural, and Cooperative Banks.

Historical Context

Launched in July 2015 by the Prime Minister to provide institutional credit to individuals for skill development courses.

Challenges

• High default rates (NPAs) in the small-ticket loan segment.
• Reluctance of commercial banks to lend for vocational courses compared to degree courses.
• Limited awareness among rural youth about the availability of credit for skilling.
• Complex documentation requirements for first-generation learners.

Reforms & Recommendations

• Integrating the loan application directly with the Skill India Digital portal.
• Incentivizing banks by increasing the guarantee cover for loans in aspirational districts.
• Introducing a 'pay-as-you-earn' model for repayment.

Performance Statistics

SDG Linkages

Constitutional Backing

Technology Used

Success Stories

Key Takeaways

• Loan amount ranges from INR 5,000 to INR 1,50,000.
• No collateral or third-party guarantee required.
• Repayment period of 3 to 7 years depending on loan amount.
• Applicable for courses at ITIs, Polytechnics, and NSDC partners.

Convergence Schemes

• Skill India Mission
• Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
• SANKALP
• National Apprenticeship Promotion Scheme

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