The Skill Loan Scheme is an initiative by the Ministry of Skill Development and Entrepreneurship (MSDE), launched in July 2015, to offer financial assistance to individuals pursuing skill development courses. This scheme empowers youth to enroll in certified training programs without worrying about the cost burden.
The loan supports various vocational courses aligned with the National Skill Qualification Framework (NSQF) and is accessible through banks associated with the Indian Banks’ Association (IBA), as well as other eligible financial institutions.
Benefits of the Skill Loan Scheme
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Courses Covered: All NSQF-aligned programs across ITIs, Polytechnics, recognized schools/colleges, NSDC-affiliated training partners, and State Skill Corporations.
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Loan Amount: From ₹5,000 up to ₹1,50,000 based on course and duration.
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Interest Rate: MCLR (Marginal Cost of Lending Rate) + up to 1.5%.
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Moratorium Period: Covers the full duration of the course.
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Repayment Tenure:
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Up to ₹50,000: 3 years
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₹50,001 to ₹1 lakh: 5 years
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Above ₹1 lakh: 7 years
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Coverage: Tuition fee (paid directly to the institution), exam fees, study materials, and other essential course-related expenses.
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No Collateral: Loans are disbursed without any collateral or third-party guarantee.
Eligibility Criteria
Applicants must fulfill the following conditions:
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Must have secured admission into a recognized course offered by:
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Industrial Training Institutes (ITIs)
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Polytechnics
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Schools/Colleges affiliated with State or Central Boards.
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Colleges under-recognized universities
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Training partners affiliated with NSDC, Sector Skill Councils, State Skill Missions, or State Skill Corporations.
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Application Process
Online Application via Vidya Kaushal Portal
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Register Online: Visit the Vidya Kaushal Portal (MSDE) and create an account.
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Choose Training Options: Select your preferred skill sector, course, and trainingcentere.
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Counselling & Centre Visit: Visit your chosen centre for counselling and career guidance.
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Raise Loan Request: Apply for a loan through the center, if required.
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Evaluate Loan Offers: Compare offers and select the most suitable one.
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Loan Disbursement: The approved loan amount is transferred directly to the training institution.
Documents Required
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Proof of Identity (Aadhaar Card, Voter ID, Passport, etc.)
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Proof of Address (Electricity Bill, Ration Card, Aadhaar, etc.)
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Proof of Income (self or guardian, if available)
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Admission Letter from the training institution
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Any other documents required by the bank or lending institution
Credit Guarantee & Loan Security
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No Collateral Required: Loans are unsecured, removing barriers for low-income individuals.
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Credit Guarantee: Backed by the Credit Guarantee Fund for Skill Development (CGFSSD), managed by the National Credit Guarantee Trust Company (NCGTC).
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Guarantee Coverage: Up to 75% of the outstanding loan (including interest) in case of default.
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Guarantee Fee: Nominal and capped at 0.5% of the outstanding amount.
Frequently Asked Questions (FAQs)
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Q: What is the maximum loan amount under the Skill Loan Scheme?
A: You can avail up to ₹1,50,000 depending on the course type and duration. -
Q: What does MCLR mean in the interest rate?
A: MCLR stands for Marginal Cost of Funds based Lending Rate, the minimum rate set by banks below which loans cannot be offered. -
Q: What is the moratorium period?
A: It is the duration of the course, during which repayment is not required. Repayment begins after the course ends. -
Q: Can I apply for this scheme without income proof?
A: Yes, while income proof is preferred, it is not mandatory for loan approval. -
Q: Which banks provide loans under this scheme?
A: All IBA member banks and select RBI-recognized financial institutions offer loans under this scheme.
