Model Skill Loan Scheme 2024 - Check Loan Amount, Features, Benefits, Launch Details

Central government has launched revised Model Skill Loan Scheme on 25 July 2024. Under revamped MSLS, govt. will provide loans upto Rs. 7.5 lakhs with a guarantee from a government promoted fund. It is expected that this new version of scheme will benefit 25,000 students every year. Read this article till the end to know Model Skill Loan Scheme complete details.

Model Skill Loan Scheme 2024 Launch

Minister of State for Skill Development and Entrepreneurship, Jayant Chaudhary, has launched the Model Skill Loan Scheme in New Delhi. The scheme aims to empower the country's future-ready workforce. Under the scheme, education and upskilling opportunities will be provided to 25 thousand youth across the country.

Loan Amount Limit Raised to Rs. 7.5 Lakh

Addressing the launch event, Mr. Chaudhary said that under the new scheme, the loan amount limit has been increased to 7.5 lakh rupees which was 1.5 lakh rupees earlier. He added that several Non-Banking Financial Companies (NBFC), scheduled banks, and rural banks also have been added to the scheme which will provide hassle-free loans to students. The Minister said that this scheme had been mentioned by the Union Finance Minister Nirmala Sitharaman in Union Budget 2024-25.

Salient Features of New Model Skill Loan Scheme 

  • New Model Skill Loan Scheme is tailored to support advanced-level skill courses, which often come with higher fees, creating a significant financial barrier for many deserving students. 
  • This initiative aims to bridge that gap, ensuring that aspiring candidates receive the necessary financial support to pursue their skill training. 
  • In the revamped model skill loan scheme, the loan amount limit has been increased to Rs. 7.5 lakh which was Rs. 1.5 lakh earlier.
  • This scheme will benefit 25,000 students every year. 

Revamped Model Skill Loan Scheme in Union Budget 2024-25

Finance Minister Nirmala Sitharaman presented Union Budget 2024-25 on 23rd July 2024. While delivering the budget speech, she said "The Model Skill Loan Scheme will be revised to facilitate loans up to Rs. 7.5 lakh with a guarantee from a government promoted Fund. This measure is expected to help 25,000 students every year."

About Skill Loan Scheme (Old Update)

The Skill Loan Scheme was launched in July 2015 to provide institutional credit to individuals for skill development courses aligned to National Occupations Standards and Qualification Packs and leading to a certificate/diploma/degree by training institutes as per National Skill Qualification Framework (NSQF).

This scheme is applicable to all member banks of the Indian Banks Association (IBA) and any other banks and financial institutions as may be advised by the RBI. Skill loan scheme provides broad guidelines to the banks for operationalizing the skilling loan scheme.

Operational Guidelines to Banks for Skill Loan Scheme Implementation

  • Eligibility - Any individual who has secured admission in a course run by Industrial Training Institutes (ITIs), Polytechnics or in a school recognized by Central or State education Boards or in a college affiliated to a recognized university, training partners affiliated to National Skill Development Corporation (NSDC) / Sector Skill Councils, State Skill Mission, State Skill Corporation.
  • Courses - Aligned to NSQF
  • Quantum of Finance - Rs 5000-1,50,000
  • Duration of Course - No minimum duration
  • Rate of Interest - Base rate (MCLR) + an add on typically up to 1.5%
  • Moratorium - Duration of the course
  • Repayment Period - Between 3 to 7 years basis the amount of loan
  • Loans upto Rs. 50,000 - Upto 3 years
  • Loans between Rs. 50,000 to Rs. 1 lakh - Upto 5 years
  • Loans above Rs. 1 lakh - Upto 7 years
  • Coverage - Course Fees (directly to the training institute) along with expenses towards completion of the course (assessment, examination, study material, etc.).
  • Collateral Free - The scheme does not allow for a collateral to be charged from the beneficiary.
  • Older Skill Loan Scheme Details - Read Here
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 credit guarantee against defaults and NCGTC will provide this guarantee at 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).

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