In 2008, the Indian Ministry of Micro, Small, and Medium Enterprises (MSME) initiated the credit-linked subsidy scheme called Prime Minister’s Employment Generation Programme or PMEGP Scheme. This scheme promotes the generation of self-employment ventures in rural and also in urban areas. PMEGP loan aims to provide sustainable and unremitting employment opportunities to the traditional and prospective artisan segment who are only seasonally employed. This scheme, through the creation of self-employment avenues, also aims to restrict urban migration.
What Is The PMEGP Full Form Of PMEGP?
PMEGP stands for Prime Minister’s Employment Generation Programme and it was launched by the government of India by merging two existing two schemes.
Eligibility For PMEGP Loan
Individuals and organizations can both avail the PMEGP term loan provided they satisfy the specified criteria laid down by the concerned authorities. These are –
- New projects that have not availed any other scheme-related subsidy.
- Only one individual per family is eligible.
- Institutions (registered under the Societies Registration Act, 1860), co-operative societies, self-help groups, and charitable trusts.
- Must have 8th standard pass
- Projects that cost above ₹10 lakh in the manufacturing sector and ₹5 lakh in the services sector.
Do We Need Any Collateral To Avail PMEGP Loan?
NO, This term loan requires no collateral security for amounts up to ₹5 lakh. Furthermore, the units that are eligible for PMEGP are covered under the Credit Guarantee Fund Scheme for Micro & Small Enterprises, with the exclusion of margin money or subsidy component.
How To Apply For PMEGP Online Loan Application?
The State or Divisional Directors of KVIC bring out advertisements locally through print and electronic media and invite applications along with project proposals. Moreover, prospective beneficiaries can also
- Apply Through advertisements or visit kviconline.gov.in
- Follow the guidelines and fill out all the necessary details as per your information.
- After completing all the steps click on “Save applicant data” to save al your details
- After that upload all the documents as a final step of your application
- last step, once you complete and submit the details, the password for the same will be sent to your registered mobile no.
How To Apply Offline?
- Fill out all the necessary data in the application form available offline
- Take the printout of the application form along with the required documents.
- Detailed project report of the unit to be set up and submit them at the concerned offices.
Features Of PMEGP Scheme
You can further understand this scheme with the following loan-related details.
- The PMEGP term loan has no income ceiling for starting projects and ventures.
- Banks allocate 90-95% of funds less 15-35% subsidy as PMEGP term loan
- The rate of interest for this term loans is at the regular applicable rate for the MSME sector.
- The tenure of loans carries a repayment schedule of 3-7 years after an initial moratorium of maximum of six months.
- The government subsidy is locked in for a period of 3 years in a separate saving account before either being adjusted to the PMEGP loan or released.
- Working capital expenditure should be equal to the cash credit limit at least once in 3 years after the subsidy is locked in and utilization should not run below 75% of the sanctioned limit.
What Type Of Business Can You Start Under The PMEGP?
- Agricultural-related product or tool manufacturing
- Research & development for agile technologies
- Recycling of bio waste products
- Agro-food processing
- Clothes manufacturing sector
- Services & Textiles
- Hand-made paper and fiber
- Polymer, and chemical-based products
Who Are Not Eligible For PMEGP Loan Scheme?
Any enterprise producing goods considered harmful to the environment such as plastic containers, plastic bags, etc. Here are some criteria which explain who are all not eligible for PMEGP –
- Meat slaughtering, processing, canning, etc.
- Production or manufacturing of intoxicants and tobacco-related products
- Horticulture, animal husbandry, sericulture, and floriculture
- Rural Transport
Management And Associated Organisations
The PMEGP is an integration of two previous schemes under the government that also worked for employment generation, viz. Prime Minister’s RojgarYojana (PMRY) and the Rural Employment Generation Programme (REGP). With this integration, it will focus on a unified rural-urban approach to setting up micro-industries and raising the employment ratio.
The MoMSME and the Khadi and Village Industries Commission (KVIC) manage it at the national level. At the state level, it is supervised by the different boards and centers of KVIC, the Director of Industries of respective states (DIC), and the bank. The authorities mentioned above approve the subsidies and channel funds through accounts in the said banks.
Organizations like Panchayati Raj boards, National Small Industries Corporation, several NGOs, etc. work in tandem with the government agencies to implement the scheme widely. They do so by identifying beneficiaries, investment pockets, and entrepreneurship training, among others.
Also Read: Mudra Loan – Everything You Must Know About
Funding And Subsidies
PMEGP offers financial assistance to all projects in the rural and urban areas that fall under the Micro-enterprises sector. The projects are categorized under the manufacturing and services sectors. The maximum cost of a project in the manufacturing industry to be admissible is ₹25 lakh, and in the services sector, this limit is ₹10 lakh.
Additionally, any per capita investment in these businesses should not exceed ₹1 lakh in the plains and ₹1.5 lakh in the hills.
In support of this funding from the PMEGP, the borrower is required to make a contribution of 10% of the amount for entrepreneurs belonging to the General category and 5% of the amount for those in the categories of SC/ST/OBC, women, minorities, physically challenged persons, ex-defense employees, and people in the NorthEast region, hills, and border areas, among others.
Now, the remaining amount of the total cost of the industry project to be set up is provided by the banks in the form of term loans to the entrepreneur of the micro-unit business. This term loan is the PMEGP loan.
The rate of subsidy allotted will be 15% for the General category in urban areas and 25% in rural regions. For the special categories mentioned above, the subsidy from the government will amount to 25% for urban areas and 35% for rural ones.
The PMEGP is a central sector scheme, and beneficiaries are to be selected at the district level by a task force of the nodal agencies. In this regard, individuals who have undergone entrepreneurship and or skill development programs such as, EDP, SDP, ESDP, or vocational training can submit project applications to banks directly. A scorecard devised in consultation with SBI and RBI will form the basis for the selection.