Loans for vocational education to be made easy

Here is good news for those who are interested in doing vocational courses for skill development irrespective of their age.

Banks are now gearing up to cater to the finance requirements of those keen on pursuing vocational education, thanks to the guidelines on a model loan scheme introduced by the Indian Banks’ Association (IBA).

Hitherto, the vocational courses offered by ITIs, ITCs, Polytechnics and other technical institutions are not covered under various educational loan schemes of banks.

“However, a need is felt for providing institutional funding for the students undergoing specialised skill development programmes in recognised institutions,’’ the IBA said in a circular sent to banks.

According to the new guidelines, vocational or skill development courses of duration of two months to three years, preferably leading to a certificate/ having good employability, can be funded by banks.

The loan ranges from Rs 20,000 to Rs 1.50 lakh normally though a bank can use its discretion to lend a higher amount on a case-to-case basis.

There will be no service charges, collateral security or third party guarantee. The interest rate would be at ‘reduced’ rates linked to the base rate of individual banks.

“The scheme is vital as the country would require 10 to 15 million skilled workers every year,” the IBA said.

GEARING UP

Banks are also ‘excited’ about the new scheme due to the small ticket loans and the assured employability angle.

“I want to promote this aggressively at all SBH branches. We will be taking the board’s approval soon,’’ Mr M. Bhagavantha Rao, Managing Director, State Bank of Hyderabad, told Business Line.

Mr B.A. Prabhakar, Chairman and Managing Director, Andhra Bank, said the bank’s board had already approved the scheme. “We have also identified various institutions offering vocational courses,’’ he added.

Canara Bank has also launched the scheme. “This is a big boost to skill development initiatives. We are sensitising the branches for speedy popularisation of these loans,” Ms Archana S. Bhargava , Executive Director, Canara Bank, said.

nagsridhu@thehindu.co.in