The Ministry of Skill Development and Entrepreneurship (MSDE) on July 11, 2026, issued the Credit Guarantee Fund Scheme for Skill Development (CGFSSD).
The following has been stated namely: -
• The Government has notified a modified Credit Guarantee Fund Scheme for Skill Development (CGFSSD), superseding previous notifications and incorporating amendments to strengthen skill loan access.
• Eligible borrowers can avail collateral-free skill loans ranging from ₹5,000 to ₹7.5 lakh, with no third-party guarantee required.
• Loans are available for NSQF-aligned courses and non-NSQF courses listed on the Skill India Digital Hub (SIDH), with no minimum course duration.
• Indian nationals enrolling in eligible skill development courses can apply. For minor students, parents/guardians will act as co-borrowers until the student attains majority.
• Banks can charge up to 1.5% above the External Benchmark Lending Rate (EBLR), while NBFCs, NBFC-MFIs, and Small Finance Banks can charge up to 20% per annum.
• Repayment tenure ranges from 3 to 7 years depending on loan amount, with a moratorium of up to 6 months (courses up to 1 year) or 12 months (courses above 1 year) after course completion.
• The Credit Guarantee Fund provides 75% guarantee on defaulted loans up to ₹4 lakh and 70% guarantee on loans between ₹4 lakh and ₹7.5 lakh.
• Lending institutions cannot charge processing fees, and tuition/course fees must be paid directly to the training institute.
• Member Lending Institutions must pay a guarantee fee of 0.50% per annum (0.125% per quarter) on the outstanding loan portfolio to avail guarantee coverage.
• Lenders can invoke the guarantee after the prescribed lock-in period (6–12 months) if the loan becomes a Non-Performing Asset (NPA). Claims are settled up to the guaranteed amount, while lenders remain responsible for recovery from borrowers.
[Notification No. SL-11/01/2023- T&P]
