Skill Development Loan in India: Rates & How to Apply
Skill Development Loan in India: Rates, Eligibility, and How to Apply
Not every valuable course leads to a four-year degree. Short-term skill courses in IT, healthcare, hospitality, fashion design, or vocational trades can be just as career-defining. Skill development loans in India are specifically designed for these shorter courses, typically with smaller loan amounts and faster processing.
If you want to upskill, reskill, or start a new career with a certified course, here is how to fund it.
Overview of Skill Development Loans
A skill development loan is a short-tenure education loan offered by banks and NBFCs for courses ranging from 3 months to 3 years. These include courses certified by the National Skill Development Corporation (NSDC), sector skill councils, DGET-affiliated institutions, and select private training providers.
The Indian Banks’ Association (IBA) introduced a model skill loan scheme in 2015 in coordination with the Ministry of Skill Development and Entrepreneurship. Under this scheme, banks offer loans from Rs 5,000 to Rs 1.5 lakh to students enrolling in NSDC-affiliated and government-approved skill training programs.
Interest Rates
| Bank | Interest Rate (per annum) | Loan Limit |
|---|---|---|
| SBI Skill Loan | 8.15% to 10.00% | Up to Rs 1.5 lakh |
| HDFC Bank | 10.50% to 14.00% | Up to Rs 1.5 lakh |
| ICICI Bank | 10.25% to 13.00% | Up to Rs 1.5 lakh |
| Axis Bank | 13.70%+ | Up to Rs 1.5 lakh |
| Canara Bank | 8.90% to 10.05% | Up to Rs 1.5 lakh |
The government provides interest subvention for economically weaker sections under certain schemes, which can reduce your effective cost further. Check with the bank whether your course qualifies.
Eligibility
- Indian national between 18 and 45 years of age.
- Enrolled in or confirmed admission to an NSDC-affiliated, sector skill council-certified, or IBA-approved training institution.
- No minimum income criterion for the student. However, co-applicant income may be evaluated for larger amounts.
- No collateral required for loans up to Rs 1.5 lakh under the IBA model scheme.
Documents Required
- Admission letter or enrollment confirmation from the training provider
- Course fee structure
- Aadhaar card and PAN card of the student
- Address proof (rental agreement, utility bill)
- Bank account details
- Co-applicant KYC and income proof if required by the lender
- Caste certificate or income certificate if applying for a subsidized scheme
Application Process
- Identify an approved course. Visit the NSDC website or the Skill India portal to check if your training provider and course are eligible.
- Visit the bank branch or apply online. SBI, Canara Bank, and Bank of Baroda have specific skill loan products. You can apply at a branch near your training center.
- Submit your documents. The process is simpler than a standard education loan because amounts are smaller and no collateral is involved.
- Loan disbursement. The loan amount is usually disbursed directly to the training institution.
- Repayment. The moratorium period is usually the course duration plus 6 months. Repayment tenure is typically 3 to 7 years.
What Expenses Are Covered?
- Course tuition and registration fees
- Examination fees
- Cost of tools, equipment, or uniforms if required by the course
- Books and study materials
FAQ
Is there a government scheme that subsidizes skill development loans?
Yes. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) covers short-term training for free in many sectors. However, for longer or specialized courses not covered by PMKVY, the IBA model skill loan scheme allows bank financing. Interest subvention may apply for SC/ST and minority students under separate schemes.
Can I get a skill development loan for an online course?
Some lenders do cover certified online programs from NSDC-affiliated providers. However, purely private online platforms without government affiliation are generally not eligible. Always confirm with the bank before enrolling.
What is the maximum repayment period for a skill loan?
The IBA model scheme allows repayment of up to 7 years after the moratorium. Some banks offer shorter tenures of 3 to 5 years for smaller amounts.
