PMEGP – Credit-linked Subsidy Program for MSMEs
PMEGP – Highlights – January 2023
|Interest Rate||Shall vary from lender to lender|
|Age Criteria||Minimum 18 years or above|
|Maximum Project Cost||Rs. 50 lakhs for Manufacturing Unit|
|Rs. 20 lahks for Service Unit|
|Subsidy on Project||From 15% to 35%|
|Eligible Entities||Business owners, Entrepreneurs, Institutions, MSMEs, Co-operative Societies, Charitable Trusts & Self Help Groups (SHGs)|
|Applicant’s Education Qualification||At least 8th class pass|
Prime Minister’s Employment Generation Programme (PMEGP) is integrated with 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 PMEGP, initiated by Govt. of India, with the help of Banks offers funding assistance to set up new enterprises. The Government has come up with a few changes to the existing scheme by increasing the maximum project cost from the existing Rs Rs 10 lakh to Rs 20 lakh for service units and Rs. 25 lakhs to Rs 50 lakhs for manufacturing units.
Under this scheme, the business owners need 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 offer term loans to the applicants for the balance amount of the total project cost at competitive interest rates.
Note: As per an official statement recently, the Govt. approved the extension of the Prime Minister’s Employment Generation Programme (PMEGP) for 5 years from 2021-22 to 2025-26.
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Let’s further discuss regarding PMEGP Scheme in detail:
Objectives of the Prime Minister’s Employment Generation Programme (PMEGP)
The PMEGP has primarily four-fold objectives:
- Banks offer financial assistance to set up new enterprises under PMEGP
- To create employment in rural, as well as urban areas in India by setting up new self-employment micro-enterprises or projects
- To increase the income-earning capacity of artisans and focus on increasing the growth rate of rural and urban employment
- 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
Subsidy & Funding under PMEGP Scheme
(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.
Interest Rate charged by Banks under PMEGP Scheme
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, creditworthiness, financial stability, repayment capability, business tenure, cost invested, and total project cost.
Loans under PMEGP can be availed by various eligible financial institutions, such as SBI, Bank of Baroda, Canara Bank, and Bank of India, as well as various other private and public sector banks.
The PMEGP loan is offered to individuals, as well as other organizations 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 up to Rs. 25 lakhs or a service unit costing up to Rs. 10 lakhs.
- Business owners and entrepreneurs
- Self-help Groups (SHGs) & Charitable Trusts
- Societies that are registered under the Societies Registration Act of 1860
- Production Co-operative Societies
Note: There are no income ceilings to avail business 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.
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Recent Update under PMEGP Scheme
Apply for 2nd Loan of up to Rs. 1 crore under PMEGP
For the up-gradation, and expansion of existing PMEGP / REGP / MUDRA units, applicants can now apply for a 2nd Loan up to Rs. 1 crore. Applicants can also avail the Government Subsidy from 15% to 20% for the 2nd loan under the PMEGP scheme.
Potential Projects under PMEGP Scheme
- Agro-based Food Processing
- Cement & Allied Products
- Chemical/Polymers & Minerals
- Cold Storage & Cold Chain Solution
- Dairy & Milk Products
- Electronic & Electrical Equipment
- Food Processing Industry
- Forest Industry
- Horticulture-Organic Farming
- Paper & Allied Products
- Plastic and Allied Services
- Service Sector Industry
- Small Business Models
- Textile & Apparel
- Waste Management
The application form for PMEGP can be downloaded in pdf format from its official website or by clicking here.
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.
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Steps to Apply for Loan under PMEGP Scheme (Online)
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 out the form online or click here: https://www.kviconline.gov.in/pmegpeportal/jsp/pmegponline.jsp
Step 2: Follow the guidelines for filling out 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 bank.
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’
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 PMEGP Scheme (2022-2023)
|Application Received||Sanctioned by Bank||Margin Money Released|
|No. of applications: 324188||No of Projects: 95917||No of Projects: 329349|
|Forwarded to Banks: 289297||Margin Money Claimed: Rs. 56898 crore||Margin Money Released: Rs. 46668 crore|
Source: https://www.kviconline.gov.in/pmegpeportal/pmegpdashboardmsme/ (Data as on Jan 2023)
Details of PMEGP Scheme (2021-2022)
|Application Received||Sanctioned by Bank||Margin Money Released|
|No. of applications: 396610||No of Projects: 111213||No of Projects: 329349|
|Forwarded to Banks: 318932||Margin Money Claimed: Rs. 104291 crore||Margin Money Released: Rs. 102595 crore|
Source: https://www.kviconline.gov.in/pmegpeportal/pmegpdashboardmsme/ (Data provided till March 2022)
PMEGP Loan Disbursement and Employment Generation (FY2021-22)
|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 engaged any private Party/Agency/ Middlemen/ Franchise etc. for promoting or sanctioning of PMEGP Projects or any financial assistance under PMEGP Programme and any potential entrepreneurs/beneficiaries dealing with such agency shall be doing it at their risk and consequences.
Get agency-wise full details by clicking here.
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Q. What is the maximum project cost allowed under PMEGP?
Ans. The maximum loan limit for a project is Rs. 50 lakhs for the manufacturing unit and Rs. 20 lakhs 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. 20 lakhs under the PMEGP scheme. The CGTMSE provides a collateral guarantee for the project beyond Rs. 5 lakhs and up to Rs. 50 lakh under the PMEGP scheme.
Q. Which businesses come 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. subsidy and ranges from 15% – 35% of the total project cost.
Q. Who are the beneficiaries that avail assistance from the PMEGP scheme?
Ans. The below-mentioned entities are the beneficiaries under the PMEGP scheme:
- Self-help Groups (SHGs)
- Charitable Trusts
- Societies registered under the Societies Registration Act of 1860
- Production Co-operative Societies
Q. If I am 28 years and 10th pass, can I apply for a loan under PMEGP?
Ans. Yes, applicants who are 18 years and above and have passed the VIII standard can apply for loans under the PMEGP scheme. There are no upper age limits, though banks may use their own criteria to prescribe an upper age limit.
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% of 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 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 lakhs or a service unit costing over Rs. 5 lakhs 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. 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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