Credit Guarantee Fund Scheme for Skill Development (First) Amendment, 2024
MINISTRY OF SKILL DEVELOPMENT AND ENTREPRENEURSHIP
NOTIFICATION
New Delhi, the 9th July 2024
No. SL-11/01/2023- T&P.—In exercise of the powers conferred by Para 19, Chapter VI of the Notification No. No.8-8/2014-SD&E (Vol.II) dated 20.11.2015 concerning Credit Guarantee Fund Scheme for Skill Development (CGFSSD) of Ministry of Skill Development & Entrepreneurship (MSDE), Government of India , the Fund constituted for the purpose makes the following modifications in Chapters-I, II, IV, V and VI respectively of the Notification No. 74 (01)/PFC-II/2024 dated 20.11.2015 namely:-
1. These amendments may be called
. Amendments
(1) For Para 2 of Chapter I, the following shall be substituted:
2. Loan Limit – The minimum and maximum loan limit under this Scheme is Rs.5000/- and Rs.7,50,000/- respectively, without any collateral security and/or third-party guarantee. However, the Fund reserves the right to revise the loan limit as and when required.
(2) For Para 3 of Chapter I, the following shall be substituted:
3. Interest Rate – The Interest Rate to be charged by the Member Lending Institution should not be more than 1.5 % p.a. over External Benchmark Lending Rate (EBLR) for Scheduled Banks (Public Sector Banks, Private Sector Banks, Foreign Banks and Small Finance Banks) and 21% p.a. (subject to change from time to time, as may be decided by the Management Committee of the Fund) for Non-Banking Financial Company (NBFC)/Non-Banking Finance Company-Micro Finance Institutions (NBFC-MFIs).
(3) For Sub-para (i) of Para 4 of Chapter I, the following shall be substituted:
i. “Skill Loans and Skill Loans Scheme” – Skill Loans refers to loans extended by lending institutions to individuals for the National Skill Qualification Framework (NSQF) aligned courses and/or the Non-NSQF aligned courses in skill development provided by the training entities onboarded on the MSDE’s Skill India Digital Hub (SIDH) platform. Skill Loan Scheme refers to the Credit Guarantee Fund Scheme for Skill Development, as modified from time to time.
(4) For Sub-para (iii) of Para 4 of Chapter I, the following shall be substituted:
iii. “External Benchmark Lending Rate (EBLR)” – As per RBI Circular No. DBR.DIR.BC. No.14/13.03.00/2019-20 dated September 04, 2019, EBLR is defined as all new floating rate for personal or retail loans and the floating rate loans to Micro and Small Enterprises extended by banks from October 01, 2019 shall be benchmarked to one of the following:
a) Reserve Bank of India policy repo rate
b) Government of India 3-Months Treasury Bill yield published by the Financial Benchmarks India Private Ltd (FBIL)
c) Government of India 6-Months Treasury Bill yield published by the FBIL
d) Any other benchmark market interest rate published by the FBIL.
(5) For Sub-para (iv) of Para 4 of Chapter I, the following shall be substituted:
iv. “Eligible Borrower”– “Eligible Borrower” means any new or existing borrower with Indian Nationality who meets the eligibility criteria with minimum qualifications to undergo skill training for the National Skill Qualification Framework (NSQF) aligned courses and/or the Non-NSQF aligned courses by the training entities onboarded on the MSDE’s Skill India Digital Hub (SIDH) platform, and who has executed the loan documents with the lending institutions to avail the loan. If the student is a minor, while the parent(s) would execute the documents, the lender will obtain a letter of acceptance/ratification from the student upon becoming major. Parents /guardians will be the co-borrowers.
(6) For Sub-para (ix) of Para 4 of Chapter I, the following shall be substituted:
ix. “Member Lending Institution(s)”– Member Lending institution(s) means the Scheduled Banks (Public Sector Banks, Private Sector Banks, Foreign Banks and Small Finance Banks) and the Non-Banking Finance Company (NBFC)/ Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs) who are registered with National Credit Guarantee Trustee Company (NCGTC) under the Scheme.
(7) For Sub-para (xii) of Para 4 of Chapter I, the following shall be substituted:
xii. “Scheme” means the Credit Guarantee Fund Scheme for Skill Development.
(8) For Sub-para (xiv) of Para 4 of Chapter I, the following shall be substituted:
xiv. “Lock-in-period”- Lock-in-period means the period during which no invocation of guarantee can be made. Lock-in-period shall be 6 months for loans upto Rs.3 lakh and 12 months for loans above Rs.3 lakh from the date of commencement of guarantee cover or end of period of moratorium of interest, whichever is later.
(9) For Sub-para (i) of Para 5 of Chapter II, the following shall be substituted:
i. Subject to the other provisions of the Scheme, NCGTC undertakes, in relation to Skill Loans ranging from Rs.5000/- to Rs.7,50,000/- extended to an eligible borrower by a Member Lending Institution (MLI) which has entered into necessary agreement for this purpose with NCGTC, to provide guarantee against default in repayment of skill loans extended by the lending institutions.
(10) The following para shall be added to Sub-para (i) of Para 6 of Chapter II:
In addition, the non-NSQF aligned courses on-boarded on the MSDE’s Skill India Digital Hub (SIDH) portal shall also be covered under the scheme, with no minimum course duration.
(11) The following Sub-para (iv) shall be added to Para 6 of Chapter II:
iv. The lending institution shall pay tuition/course fee related to the course being undertaken under the scheme directly to the Training Institute. Any other reasonable expenditure found necessary for completion of the course including but not limited to assessment fee, examination fee, library charges, laboratory fee, caution deposit, purchase of books, equipment’s and instruments, etc. may be covered. As such courses are localized, the boarding and lodging may not be necessary. However, wherever it has been found necessary, the same could be considered on merit based on the cost of living in the particular area.
(12) For Sub-para (iii) of Para 7 of Chapter II, the following shall be substituted:
iii. Any Skill loans which have been sanctioned with the interest rate higher than 1.5% p.a. over the External Benchmark Lending Rate (EBLR) by a Scheduled Bank and the interest rate higher than 21% p.a. (subject to change from time to time as may be decided by the Management Committee of the Fund) by an NBFC/NBFC-MFI. However, the Fund may revise such ceiling benchmark parameters or interest rate cap from time to time keeping in view the prevailing RBI guidelines/RBI policy rates.
(13) The following Sub-paras (x), (xi), (xii), (xiii) and (xiv) shall be added to Para 9 of Chapter II:
(x) The lending institution shall pay tuition/course fee related to the course being undertaken under the scheme directly to the Training Institutes.
(xi) No Processing fee will be charged by lending institutions on loans sanctioned under the scheme.
(xii) The loans under the scheme will have a repayment tenure as follows:
| Loans up to ₹ 50,000 | Upto 3 years |
| Loans between ₹ 50,000 to ₹ 1.0 lakh | Upto 5 years |
| Loans above ₹ 1.0 lakh | Upto 7 years |
(xiii) In order to instil repayment behaviour and get some commitments from the students, the lenders may have instalment during the course period itself. However, the total amount paid by the student as down- payment towards course fee and Equated Monthly Instalments (EMI) during the course together should not exceed 10% of the total course value.
It is advised that the lenders should consider moratorium for specific courses or certain sections of the students. Upon completion of the course, repayment may start after a moratorium period as indicated below:
| Courses of duration upto 1 year | Moratorium up to 6 months from the completion of the course |
| Courses of duration above 1 year | Moratorium up to 12 months from the completion of the course |
The lenders will have flexibility to choose the structure of repayment – flat Equated Monthly Instalments (EMI), tube payments or moratorium period as deemed fit for various sectors and student categories.
(xiv) The borrower can repay the loan any time after commencement of repayment without having to pay any prepayment charges. In case a student is not able to complete the course because of accident/death/disability, the lender can seek a pro-rata reimbursement of the unfinished portion of the course amount from the training institute.
(14) For Para 11 of Chapter IV, the following shall be substituted:
11 The Fund shall provide guarantee cover as under:
| Loan Slab (Rs Lakh) | Guarantee coverage on amount in default |
| 0.05-4.0 | 75% |
| 4.0-7.5 | 70% |
The Fund reserves the right to modify the same. The guarantee cover will commence from the date of payment of guarantee fee and shall run through the agreed tenure of the skill loans.
(15) For Sub-para (i)(b) of Para 12 of Chapter V, the following shall be substituted:
(i) (b) The lock-in period of 6 months for loans upto Rs.3 lakh and 12 months for loans above Rs.3 lakh from either the end of period of moratorium of interest or the date of commencement of guarantee cover in respect of loan covered, whichever is later, has elapsed. A lock-in-period has been stipulated from the date of commencement of guarantee cover or end of period of moratorium of interest, whichever is later.
(16) The following Sub-para (vii) shall be added to Para 12 of Chapter V:
vii. Claim payout (irrespective of the year of claims) on loans disbursed during FY 2024-25 and FY 2025-26 shall be capped at 20% of the total loans disbursed during the year to which the loan pertained. This cap shall be reduced to 15% w.e.f. FY 2026-27.
NILAMBUJ SHARAN,
Sr. Economic Advisor
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