Skill Loan Scheme (Model Skill Loan Scheme)

What is the Skill Loan Scheme?

The Skill Loan Scheme is a government credit scheme that helps Indian students pay for skill development courses through collateral-free loans from banks and NBFCs. It is anchored by the Ministry of Skill Development and Entrepreneurship and supported by the National Skill Development Corporation (NSDC), with the loan guarantee provided by the National Credit Guarantee Trustee Company (NCGTC).

The scheme was first launched in 2015 and then revamped as the "Model Skill Loan Scheme" on 25 July 2024. The most important change was the sharp increase in the maximum loan: from Rs 1.5 lakh to Rs 7.5 lakh; making it possible to fund longer and more expensive vocational courses. The scheme is meant to remove the money barrier for young people who want to learn a trade or job-ready skill but cannot pay the course fee up front.

Key features

• Collateral-free loans: no security or guarantor needed from the student.
• Maximum loan of Rs 7.5 lakh.
• A credit guarantee of 70-75% to banks/NBFCs from NCGTC, which is what lets banks lend without collateral.
• No age limit and no minimum course duration.
• Open to a wide range of NSQF-aligned courses.

Who is eligible for the Skill Loan Scheme?

You can apply if:

• You are an Indian national.
• You have secured admission to a course run by an eligible institution. An Industrial Training Institute (ITI), a polytechnic, a school recognised by a Central or State Education Board, a college affiliated to a recognised university, or a training partner affiliated to the NSDC, a Sector Skill Council, a State Skill Mission or a State Skill Corporation.
• The course is aligned with the National Skills Qualification Framework (NSQF).

There is no minimum age and no minimum course-duration requirement, which makes the scheme unusually open compared with regular education loans.

You cannot use the scheme if:

• Your course is not run by an eligible institution or is not NSQF-aligned, for example a purely private, unrecognised course.
• You are not an Indian national.
• You have not yet secured admission. The loan is sanctioned against a confirmed admission, not for exploring options.

How much can you borrow and on what terms?

According to the model scheme, the loan can be up to Rs 7.5 lakh, with the amount sanctioned depending on your course fees and the lending institution's assessment. Because the loan is collateral-free, banks rely on the NCGTC credit guarantee (covering 70-75% of any default) rather than on security from the student.

Interest is typically the bank's applicable lending rate (MCLR) plus a spread of around 1.5%; the exact rate varies by bank, so compare offers. Repayment periods are graded by loan size:

A moratorium equal to the course duration applies, so repayment starts after the course ends. Confirm the precise interest rate, processing terms and moratorium with the bank before signing.

What documents are required?

How to apply for the Skill Loan Scheme

1. Secure admission to an eligible NSQF-aligned skill course at an ITI, polytechnic, recognised school/college, or an NSDC-affiliated training partner.
2. Choose a participating lender — public sector banks such as SBI, Canara Bank, Bank of Baroda and Bank of India offer skill loans; or use the government Jansamarth portal (jansamarth.in), which lets you apply online under the skilling loan category.
3. Fill the loan application and attach your admission letter, KYC documents, the course fee structure and your bank account details.
4. The bank assesses your application against the scheme norms; because it is collateral-free, no security is asked for.
5. On sanction, the loan is disbursed; usually the fee portion directly to the training institute, with any maintenance component to you, and repayment begins after the moratorium.

Because the loan is delivered through banks and NBFCs, there is no separate "scheme office" to approach. The bank branch or the Jansamarth portal is your application point.

Help and contact

• Jansamarth portal: jansamarth.in (skilling loan category); toll-free 1800-267-3456, or 079690-76111
• Participating banks: SBI, Canara Bank, Bank of Baroda, Bank of India and others: approach any branch
• NSDC / Skill India for information on eligible courses and training partners

Interest rates, processing fees and the exact sanctioned amount are decided by the individual bank within the scheme's framework, so it is worth comparing two or three lenders. Always confirm that your chosen course is NSQF-aligned and run by an eligible institution, since that is what makes the loan qualify under the scheme.