Credit Guarantee Fund Scheme for Skill Development (CGFSSD)

About the Scheme

The Credit Guarantee Fund Scheme for Skill Development (CGFSSD) supports individuals pursuing skill-based education through an education loan. It covers courses aligned with the National Skill Qualification Framework (NSQF) offered by recognised institutions such as ITIs, polytechnics, and colleges. The scheme offers collateral-free loans with a government guarantee to the lending institutions. This makes it easier for individuals to access funding for skill training and improve their job opportunities.

Rate of Interest

The interest rate for the education loan under the Credit Guarantee Fund Scheme for Skill Development (CGFSSD) is set at a maximum of 1.5% per annum above the Repo Linked Lending Rate (RLLR) or any other external benchmark rate, per the guidelines of the Reserve Bank of India.

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₹10,000/Month

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Features of the Scheme

Here are the features of the Credit Guarantee Fund Scheme for Skill Development (CGFSSD):

1. Loan Amount Range:

   The loan amount varies from ₹5000 to ₹1,50,000 under this scheme to support skill development.

2. Collateral Requirements:

   The absence of collateral requirements or third-party guarantees makes it easy to apply for and secure the loan.

3. Valid for Skill Loans Since July 2015:

   The scheme applies to skill loans sanctioned from July 15, 2015, for courses under the National Skill Qualification Framework (NSQF).

4. Support for Growth:

   This scheme complements a child education plan, helping young learners gain job-ready skills.

5. Financial Protection on Loan Defaults:

   The scheme provides a loan guarantee of up to 75% of loan amounts in case of defaults, thus ensuring an extra margin of security for you.

6. Tax Benefits:

   This can ease the repayment burden by allowing a deduction under Section 80 E of the interest paid.

Eligibility of Scheme

The following are the eligibility criteria for this scheme:

• The borrower should be an Indian citizen.

• A borrower is to apply under the Skill Loan Scheme as per the guidelines of the Indian Banks' Association to obtain the loan.

• The course should fall under the National Skill Qualification Framework (NSQF).

• The applicant must be a student of a recognised institution such as ITIs, polytechnics or colleges.

• Those courses not recognised by the authorities or guidelines laid down by the Reserve Bank of India will not be eligible for the loan.

Documents Required

When applying for the CGFSSD, you'll need to submit the following documents:

• KYC documents of borrower and co-borrower.

• Proof of admission to the skill development course.

• Details of the course fees or the schedule of expenses.

• Bank account details and statements for the last six months (if applicable).

• Any property documents (if applicable).

Most Important Terms and Conditions

Here are the key terms and conditions of the scheme:

• Banks must ensure that the borrower qualifies under the Skill Loan Scheme.

• This will be a collateral-free and third-party guarantee-free loan.

• Banks will supervise and monitor the loans.

• Banks pay a guarantee fee of 0.125% per quarter (0.50% per annum) on the outstanding loan portfolio.

• Borrowers could benefit from the interest deduction under Section 80 E, reducing the repayment burden.

• Banks should ensure compliance with the scheme and submit relevant information to NCGTC.

• To improve financial planning, one can use an income tax calculator that calculates savings with regard to possible tax deductions with loan interest.