In August 2008, the Indian government approved the implementation of a new credit-linked subsidy program known as the PMEGP (full form – Prime Minister’s Employment Generation Programme). The PMEGP scheme was brought to life by combining two existing schemes – Prime Minister’s Rozgar Yojana (PMRY) and Rural Employment Generation Programme (REGP) and was launched by the Ministry of Micro, Small, and Medium Enterprises. This was done primarily to generate employment opportunities in the non-farm sector for rural and urban areas.
Under this scheme, a beneficiary invests 5-10% of the total investment and the government provides a 15-35% subsidy based on the applicant’s eligibility. State KVIC (Khadi and Village Industries Commission) Directorates, District Industries Centers (DICs), State Khadi and Village Industries Boards (KVIBs) and banks are responsible for implementing the PMEGP scheme at the state level. The KVIC can route government subsidies through designated banks for subsequent disbursement directly into the beneficiaries’ or entrepreneurs’ bank accounts. Read on to know the PMEGP loan interest rates, eligibility, documents, banks’ list and how to apply.
PMEGP has proven beneficial in boosting the growth of the MSME sector and, as a result, improving the country’s economic situation. It was implemented to meet the following objectives:
Beneficiaries may be eligible for a government subsidy ranging from 15% to 35% of the project cost. The funds available under the PMEGP Scheme are based on levels of support in urban and rural areas according to the category:
|Beneficiary Category||The Share of Beneficiary(Of Total Project)||Rate of Subsidy(From Govt.) – Urban||Subsidy Rate (From Govt.) – Rural|
The maximum cost of a project admissible for margin subsidy in the manufacturing sector is up to Rs.25 lakh, and in the business or service sector is Rs.10 lakh. The bank provides the balance of the total project cost under this scheme as a term loan.
|Categories of beneficiary under PMEGP( for upgradation of existing unit)||Beneficiary’s contribution (for project costs)||Rate of subsidy (for project costs)|
|All categories||10%||15% (20% in NER and hill state)|
The bank provides the balance of the total project cost under this scheme as a term loan.
Under the PMEGP scheme, a standard interest rate is charged, but the rate of interest and subsidy offered varies across banks. It is calculated based on the applicant’s profile, their creditworthiness, repayment capacity, financial stability, business tenure, cost invested, and total project cost. PMEGP loan interest rates usually range between 11 and 12%. With an initial moratorium prescribed by the bank or financial institution, the repayment schedule typically ranges between 3 and 7 years.
The following list contains the documents required for PMEGP loans for a smooth process:
Prospective beneficiaries are invited to submit applications, along with project proposals, for establishing an enterprise or launching service units under the PMEGP. Local advertisements in print and electronic media inviting applications in consultation with KVIB and the respective state’s Director of Industries (for DICs) are issued by the State/Divisional Directors of KVIC.
Beneficiaries can also apply for a PMEGP loan online at their official website.
Step 1: Follow the instructions for completing the online PMEGP application and enter all the required information.
Step 2: After entering all the required information, click ‘Save Applicant Data’ to save the completed details.
Step 3: After saving your data, you can upload all of the documents for the application form’s final submission.
Step 4: An application ID number and password are sent to the registered email address for future use.
You can also apply for a PMEGP loan in offline mode. You can print out an application from their official website and submit the filled application to the respective office along with the Detailed Project Report and other required documents.
Financial institutions under the PMEGP scheme are:
Some of the banks under the PMEGP loan are listed below:
|IDFC First Bank||Bank of Baroda|
|Indian Bank||Bank of India|
|Kotak Mahindra Bank||Canara Bank|
|Punjab National Bank||Central Bank of India|
|State Bank of India||HDFC Bank Ltd.|
|UCO Bank||ICICI Bank Ltd.|
|Union Bank of India||Axis Bank|
Central Government schemes such as the Prime Minister’s Employment Generation Programme (PMEGP) have opened new avenues for developing and promoting employment and entrepreneurship in the micro sector. The PMEGP scheme assists traditional artisans and unemployed youth in rural and urban regions in establishing non-farm micro-enterprises. The bank evaluates the project, decides based on its viability, and grants a loan.
The scheme has proven to be advantageous at a time when the economy is still recovering from the effects of the COVID-19 pandemic. The PMEGP loan provides many individuals and businesses in the country with a much-needed credit infusion.
Ans: Up to Rs.25 lakh in the manufacturing sector and Rs.10 lakh in the service sector for setting up a new micro-enterprise.
Ans: No. Banks provide the balance of the cost of the project in the form of credit facilities and working capital.
Ans: Loan, working capital, and 10% of the project cost as an own contribution in the case of the general category, and 5% of the project cost in the case of the weaker section.
Ans: According to RBI guidelines, projects worth up to Rs. 10 lakhs are exempt from collateral security under PMEGP loans.
Ans: The lock-in period of government subsidies is 3 years.
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