PMEGP – Credit-linked Subsidy Program offered by Government of India to support MSMEs
|Interest Rate||Shall vary from lender to lender|
|Age Criteria||Minimum 18 years|
|Maximum project cost||Rs. 25 lakh for Manufacturing Unit|
|Rs. 10 lakh for Service Unit|
|Subsidy on Project||From 15% to 35%|
|Eligible Entities||Business owners, Institutions, Co-operative Societies, Charitable Trusts & Self Help Groups|
|Applicant’s Education||At least 8th class pass|
PMEGP scheme is integrated two earlier schemes, viz. Prime Minister Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP) were working along similar lines to generate employment among the youth. Under this scheme, the beneficiary has to invest only 5-10% of the project cost while the government provides a Subsidy of 15-35% of the project based on different criteria. The participating banks provide the rest of the funds as term loans to the entrepreneur. We look at this in some detail in the below section.
Objectives of the Prime Minister’s Employment Generation Programme (PMEGP)
The PMEGP has four-fold objectives:
- To create employment in rural, as well as urban areas in India by setting up new self-employment micro-enterprises or projects.
- To provide a common ground for the widely dispersed traditional artisans and unemployed youth in both rural and urban areas to come together and create self-employment avenues.
- To take steps to prevent the migration of rural people to cities to seek employment by giving them stable and sustainable employment. This is especially for traditional and prospective artisans and rural and urban unemployed youth who get traditional or seasonal employment and remain unemployed the rest of the year.
- To increase the income-earning capacity of artisans and focus on increasing the growth rate of rural and urban employment.
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Subsidy and Funding under PMEGP
(of Total Project)
(from Govt.) – Urban
(from Govt.) – Rural
The balance amount of the total project cost is provided by the banks as a term loan to the micro-unit entrepreneur. This term loan is more commonly referred to as a PMEGP Loan.
What is the Interest Rate charged by banks on PMEGP Loan?
The interest rate and subsidy offered under the PMEGP scheme from various financial institutions shall vary from bank to bank and shall depend upon the applicant’s profile, business stability, and project cost.
Loans under PMEGP can be availed by various eligible nationalised banks, such as SBI, Bank of Baroda, Canara, Bank of India, as well as other private and public sector banks and NBFCs.
The PMEGP loan is given to individuals as well as other organisations that meet the specified criteria for such a term loan. The list of such eligible entities who can apply for loans under PMEGP is mentioned below:
- Individuals must have passed at least Class VIII of schooling if they want to establish a manufacturing unit costing over Rs. 10 lakh or a service unit costing over Rs. 5 lakh
- Self-help Groups (SHGs) & Charitable Trusts come under eligible entities to avail loans under the PMEGP scheme
- Societies that are registered under Societies Registration Act, 1860
- Production Co-operative Societies
There are no income ceilings to avail loans under the PMEGP scheme. Loans are offered to new units and are not available for existing units established under PMRY, REGP, or any other government scheme. Moreover, any unit that has availed subsidy under any other scheme is not eligible for the PMEGP loan.
Recent Update under PMEGP Scheme
Apply for 2nd Loan of up to Rs. 1 crore under PMEGP
For the up-gradation, expansion of existing PMEGP / REGP / MUDRA units, applicants can now apply for a 2nd Loan up to Rs. 1 crore. Applicants can also avail Government Subsidy from 15% to 20% for the 2nd loan under the PMEGP scheme.
PMEGP Loan Bank List – January 2022
Below mentioned is the list of leading banks providing funding assistance under the PMEGP scheme:
|Axis Bank||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|
Loans under the PMEGP scheme are also provided by several financial institutions formed under various banking and non-banking categories, such as Private and Public Sector Banks, Regional Rural Banks (RRBs), Co-operative Banks, Small Finance Banks (SFBs), Non-Banking Financial Companies (NBFCs), Foreign Banks and Scheduled Urban Banks. The application form for PMEGP can be downloaded in pdf format from its official website or by clicking here.
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Documents required for Loans under PMEGP Scheme
The following documents are required when applying for a PMEGP loan application:
- Duly filled application form with passport-sized photographs
- Project report
- Applicant’s Identity & Address Proofs
- Applicant’s PAN card, Aadhaar card & VIII Pass certificate
- Special category certificate, if required
- Certificate of Entrepreneur Development Programme (EDP) training
- Certificate for SC/ST/OBC/Minority/Ex-Servicemen/PHC
- Certificate of academic and technical courses, if any
- Any other document required by the bank or NBFC
PMEGP e-portal provides access to the applicants to apply for the PMEGP registration online by filling and submitting the application form online at https://www.kviconline.gov.in/pmegp.jsp
PMEGP loan helpline number is 1800 3000 0034 and to get a state-wise contact number, applicants can visit the official website by clicking here. https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp
Further, let’s discuss regarding PMEGP online application process from which various people may be benefited.
How to get Business Loan under PMEGP Scheme?
Below mentioned are the steps to apply for PMEGP Online for an individual:
Step 1: Visit the official website of PMEGP (Khadi and Village Industries Commission website) to fill the form online or click here: https://www.kviconline.gov.in/pmegpeportal/jsp/pmegponline.jsp
Step 2: Follow the guidelines for filling the online PMEGP application and fill in all the required details, as per your information
Step 3: After filling in all the required details, click on ‘Save Applicant Data’ to save the filled derails
Step 4: After you have saved your data you need to upload all the documents for the final submission of the application form
Step 5: Once the application is complete and submitted, the applicant’s ID number and password will be sent to his/her registered mobile number
Steps to Apply for Loans under PMEGP Scheme (Offline)
Step 1: Fill in the required information in the application form.
Step 2: After filling in all the information, save the application as a draft.
Step 3: Take a printout of the application form.
Step 4: Submit the printout of the application form to the nearest office.
Step 5: Finish all the related formalities performed by the respective bank.
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Steps to Check PMEGP Loan Application Status via PMEGP e-tracking System
Step 1: Visit the official website of PMEGP or click on this link: kviconline.gov.in/pmegp/
Step 2: Click on ‘Login Form for Registered Applicant’ to open a new page where you can see login and password fields
Step 3: Enter your ID and Password and click on Login
Step 4: Finally to check the status of your PMEGP loan application, you need to click on ‘View Status’
PMEGP Loan Details
The below sections look at different aspects of the PMEGP Loan, from the percentage share of each party in the allocation of funds to interest rate and tenure.
- PMEGP Loan Allocation: Here is a look at the breakup of the money that is given under a PMEGP Loan
1. Once the application is approved, the bank allocates 95% of the project cost (for weaker sections of society) or 90% (for general applicants).
2. Of this, 15-35% is the margin money or subsidy that is provided by the government. The amount of margin money that will be taken by banks will be proportional to the actual capital expenditure availed by the applicant. The rest of the margin money that is proportional to the amount not availed will be returned to the Khadi and Village Industries Commission (KVIC).
3. The rest of the funds (i.e. 90/95% of funds allocated less than 15-35% subsidy) are provided by the bank as a term loan or PMEGP loan.
- Rate of Interest: The rate of interest on the PMEGP loan will be at a normal rate as applicable to the MSE sector
- Tenure of the PMEGP Loan: After an initial moratorium (that usually does not exceed 6 months), the bank may provide a repayment schedule of 3 years for the borrowers to pay back the PMEGP loan
- Margin Money / Subsidy: The margin money is kept in a separate savings account that is linked to the loan account, and locked in for a period of 3 years, after which it is adjusted with the PMEGP loan or released
- Working Capital Requirements: The PMEGP loan requires that the working capital expenditure be equal to the cash credit limit at least once in the three years after the margin money is locked in. Moreover, it should not be less than 75% utilisation of the sanctioned limit
- Indicative Sectors for Which Business Loan under PMEGP Scheme is Given: The PMEGP loan is given for enterprises in the following sectors:
- Agro-based Food Processing
- Forest-based Products
- Hand Made Paper and Fibre
- Mineral-based Products
- Polymer and Chemical-based Products
- Rural Engineering and Bio-Tech
- Service and Textile
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Financial Assistance under PMEGP Scheme
The scheme offers financial assistance to people based on different criteria. However, since the scheme covers micro, small and medium-sized enterprises (MSMEs), there are certain specifications on the number of projects that qualify and the size of the loan that is offered.
The amount of contribution required from the borrower is 10% for the General category and 5% for the Special categories, such as SC/ST/OBC, minorities, women, ex-defense employees, physically challenged persons, and people from the North East region, hills, and border areas, among others.
The rate of subsidy will be 15% for the General category in urban areas and 25% in rural regions. For the Special categories of people, the subsidy from the government will be 25% for urban areas and 35% for rural locations.
Details of MSME Loans under PMEGP Scheme (2020-2021)
|Application Received||Sanctioned by Bank||Margin Money Released|
|No. of applications: 2,16,4958||No of Projects: 3,14,339||No of Projects: 27,4435|
|Margin Money: Rs. 61,801.56 crore||Margin Money: Rs. 9,731.32 crore||Margin Money: Rs. 7,805.32 crore|
Source: https://www.kviconline.gov.in/pmegpeportal/pmegpdashboardmsme/ (Data of Jan 2022)
PMEGP Loan Disbursement and Employment Generation (FY2021)
|Micro Units availed loans under PMEGP||84,793 (Target: 78,625)|
|Employment generated||6,78,344 (Target: 6,29,000)|
Note: KVIC /KVIB /DIC /COIR have not involved any private party, agency, middlemen or franchise, etc. for promoting or sanctioning of PMEGP Projects or any funding under the PMEGP scheme.
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FAQs on PMEGP Loan
Q. What is the PMEGP Full Form?
Ans. PMEGP stands for Prime Ministers Employment Generation Programme.
Q. What is the maximum project cost allowed under PMEGP?
Ans. The maximum loan limit for a project is Rs. 25 lakh for the manufacturing unit and Rs. 10 lakh for the service unit.
Q. Is collateral required for a loan under PMEGP?
Ans. No, collateral is not required for projects costing up to Rs. 10 lakh under the PMEGP scheme. The CGTMSE provides a collateral guarantee for the project beyond Rs. 5 lakh and up to Rs. 25 lakh under the PMEGP scheme.
Q. Which business comes under PMEGP?
Ans. To check the extensive project list of businesses that come under PMEGP, you can visit the below link for information: https://www.kviconline.gov.in/pmegp/pmegpweb/docs/jsp/newprojectReports.jsp
Q. What is a PMEGP subsidy?
Ans. Prime Minister Employment Generation Programme (PMEGP) Subsidy is a credit-linked subsidy provided by the Government of India in which the beneficiary can get a subsidy of 15%-35% on the total project cost. This subsidy can be majorly availed by individuals and MSMEs across the country.
Q. How much Margin Money (Govt. Subsidy) is admissible?
Ans. The margin money is the same as the Govt. A subsidy that ranges from 15%-35% of the total project cost.
Q. Who are the beneficiaries under the PMEGP scheme?
Ans. The below-mentioned entities are the beneficiaries under the PMEGP scheme:
- Self-help Groups (SHGs)
- Charitable Trusts
- Societies registered under Societies Registration Act, 1860
- Production Co-operative Societies
Q. Who can apply for a PMEGP loan?
Ans. Applicants who have passed the VIII standard can apply for loans under the PMEGP scheme. Additional entities that can apply for loans under PMEGP include Self-help Groups, Charitable Trusts, Societies registered under Societies Registration Act, 1860, and Production Co-operative Societies.
Q. How long does it take to get a PMEGP loan?
Ans. After the training program is completed which is of around 16 days, the approximate time duration to avail loan under PMEGP from banks usually requires approximately 2 months in total.
Q. Can I get a PMEGP loan for a fast food restaurant?
Ans. Yes, you can avail loan under the PMEGP scheme to start a fast-food restaurant. If eligible you can also avail PMEGP subsidy of 90% on the total project cost offered by the Government of India. The PMEGP subsidy shall range from 15%-35%, depending upon the loan amount.
Q. Are there any age restrictions on taking a PMEGP loan?
Ans. The Prime Minister’s Employment Generation Programme (PMEGP) mandates that applicants be at least 18 years of age. There are no upper age limits, though banks may use their own criteria to prescribe an upper age limit.
Q. Are there any education restrictions on taking a PMEGP loan?
Ans. The beneficiary must have studied and passed class 8 if they want to establish a manufacturing unit costing over Rs. 10 lakh or a service unit costing over Rs. 5 lakh with a PMEGP loan.
Q. Can a person living in an urban area take a PMEGP loan?
Ans. Yes, this loan scheme is available to all eligible applicants, no matter where they stay. There are certain restrictions, however, on how much subsidy one can get. For instance, the subsidy for the general category is 15% in urban areas, while it is 25% in rural. For the weaker sections of society, it is 25% in urban areas and 35% in rural.
Q. What is margin money under a PMEGP loan? How does it benefit me?
Ans. Margin money refers to the subsidy you get from the Khadi and Village Industries Commission (KVIC). It is the amount that the government contributes to your business under the PMEGP loan. This margin money is given to the bank and is subject to a lock-in period of 3 years.
Q. Will the bank give me the margin money?
Ans. Yes, the bank gives you the margin money after the lock-in period, provided you have used your funds, as per the guidelines provided by the bank.
Q. Are there any guidelines on fund utilisation?
Ans. The PMEGP loan requires that the working capital expenditure be equal to the cash credit limit at least once in the 3 years after the margin money is locked in. Moreover, it should not be less than 75% utilisation of the sanctioned limit.
Q. What is the PMEGP project report cost?
Ans. The project cost is the break-up of the capital expenditure and the working capital requirements for one cycle. It also includes the cost of leasing or renting any work shed or workshop, provided the total of such rent/lease is not for more than 3 years. 10% of the project cost should comprise of the applicant’s own contribution for the general category and 5% of the project cost should be one’s own contribution for the special category. The cost of land cannot be included in the project cost.
Q. I do not have any working capital expenses. Will I be able to get a PMEGP loan?
Ans. Yes, you can. You need the approval of the breakup without working capital from the regional office or controller of the bank branch.
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