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Introduction
The Government of India over the decades has come out with various schemes and financial assistance packages to tackle the problem of unemployment in the country. One such programme launched by the Government is the Prime Minister’s Employment Generation Programme, more commonly known as PMEGP. This scheme was launched in the year 2008 with the aim to generate employment opportunities especially in the MSME sector and was implemented at the national level by the Khadi and Village Industries Commission (KVIS). With the launch of this scheme, similar programmes launched by the Government earlier [namely, Prime Minister’s Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP)], have been integrated under this single programme.
About Prime Minister Employment Generation Programme
What is PMEGP?
The Government of India over the decades has come out with various schemes and financial assistance packages to tackle the problem of unemployment in the country. One such programme launched by the Government is the Prime Minister’s Employment Generation Programme, more commonly known as PMEGP. This scheme was launched in the year 2008 with the aim to generate employment opportunities especially in the MSME sector and was implemented at the national level by the Khadi and Village Industries Commission (KVIS). With the launch of this scheme, similar programmes launched by the Government earlier [namely, Prime Minister’s Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP)], have been integrated under this single programme.
PMEGP, as mentioned earlier, was launched with the view to provide assistance with employment opportunities in urban as well as rural parts of the country. Under this scheme, the Government provides credit linked subsidies on loans to the eligible applicants through banks. The Government will provide 15% to 35% of the credit allowed to the applicants depending on the factors like urban and rural applicants as well as category of applicants (general or special).
Eligibility for PMEGP
Financial assistance is provided to eligible individuals as well as organizations under PMEGP as a form of term loans. The eligible applicants under the scheme are discussed below.
The minimum age requirement of eligible individuals has to be 18 years.
The minimum educational requirement is passing 8th standard for those that require funds more than Rs. 5,00,000 in the service or business sector and more than Rs. 10,00,000 in case of manufacturing sector.
The other eligible entities are listed below
- Charitable Trusts
- Co-operative Societies engaged in production activities
- Societies registered under Societies Registration Act, 1860
- Self Help Groups (including those that fall Below Poverty Line but excluding those that have received benefits from any other Government schemes)
The scheme specifically excludes those existing units that have availed benefits or subsidies under PMRY, REGP or any other State or Central Government Schemes.
Documents Required for PMEGP
The documents required for the loan application process under PMEGP comprise basic KYC documents as well as a few additional documents. The list of documents required is listed below.
- KYC documents for Identity proof and address proof of the applicant (Aadhaar Card, PAN Card, Voter’s Id, etc.
- Caste Certificate or Community Certificate to define or verify the category of application
- Education/Skill Development training Certificate or Entrepreneurship Development Programme Training Certificate.
- The project report with the breakup of one cycle of capital expenditure and working capital component.
- In the absence of working capital requirement, an approval letter or certificate from the controlling office of the bank is required ascertaining it.
Objectives of PMEGP Loans
PMEGP was launched with the idea to generate maximum employment opportunities for the urban as well as rural population. The objectives of the PMEGP loans are mentioned below.
- Creation of new employment opportunities in urban and rural areas by means of new MSME units.
- Provision of a common platform for urban and rural artisans to generate self-employment opportunities.
- Prevent migration of youth to urban areas by enabling and strengthening the local artisans and providing employment opportunities throughout the year.
- Enabling the increase in the wage earning capacity of the local artisans and thereby promote the rural/urban economy and eventually the economy of the country as a whole.
PMEGP Loan Details
The various details of the loans offered under PMEGP are discussed below.
Amount of Loan
The scheme offers loans for the manufacturing sector as well as the service or business sector. The amount of loan for each sector is capped at Rs. 25,00,000 and Rs. 10,00,000 respectively.
Subsidy offered
The Government offers assistance in the form of subsidies on the loans under PMEGP. These subsidies vary on the basis of the category of the beneficiary (general or special) as well as the location of the beneficiary (rural or urban). The quantum of subsidy allowed to the beneficiaries is tabled below.
Category | Location | |
Urban | Rural | |
General | 15% | 25% |
Special | 25% | 35% |
Special category includes minorities, SC/ST, OBC, NER, Physically Handicapped Persons, Ex-Servicemen, etc.
The loans offered by the banks will include the subsidy portion offered by the Government. The remaining portion of the loan (excluding the margin to be provided by the individuals) will have to be covered by the bank.
Margin
The loan requires the borrowers to provide a percentage of the loan as a margin. This percentage will depend on the category of the beneficiary. The details of the margin to be provided are mentioned below.
Category | Margin to be provided |
General | 10% |
Special | 5% |
Rate of Interest
The rate of interest on the loans provided under PMEGP ranges from 11% to 12%. This rate will depend on various factors like the amount of loan, tenure of the loan, location of the borrower, category of the borrower, credit profile, etc.
Tenure
The tenure of the loans under PMEGP is from a minimum period of 3 years to a maximum period of 7 years. The banks can provide a uniform moratorium of a period not exceeding 6 months.
Working Capital requirement
The scheme requires the working capital to be 100% of the cash credit limit at least once in the 3 years of the lock-in period of the loan. Additional requirement for the same is that the utilization for working capital portion should not be less than 75% of the sanction limit on an average.
Collateral/Security
The scheme states that as per RBI guidelines the loans for projects costing up to Rs. 10,00,000 are not required to provide any collateral or security. Furthermore, CGTSME provides security or collateral guarantee on loans for projects costing from Rs. 5,00,000 to Rs. 25,00,000. Collateral requirements for projects that cost more than Rs. 10,00,000 may differ depending on the lender guidelines and regulations.
PMEGP Loan Application process
The loan application process for PMEGP is very simplistic in order to ensure an ease of application to the borrowers. Also, the application can be made only through the online portal available at the PMEGP website.
Applicants can visit any of the following websites to go to the PMEGP eportal. Next, applicants will have to click on the link available for application form for individuals or non-individuals respectively and they will be directed to the application form.
Applicants are required to fill in all the relevant details correctly such as name, type of activity, sponsoring agency, educational qualification, bank account details, etc.
After filling the data correctly, applicants can click on ‘Save Applicant Data’.
Following this, all the necessary documents have to be uploaded in the required format.
Upon submission of all the relevant documents and the application form, applicants will receive an application Id and a password which will be sent to their registered mobile number.
List of Eligible and Non-Eligible Activities under PMEGP
The list of eligible activities for which persons can apply for loans under PMEGP is mentioned below.
- Mineral sourced products
- Agro based food processing units
- Service and textile products
- Bio-technology and Rural engineering products
- Chemicals and Polymer sourced products
- Forest sourced products
- Hand-made paper and fibre production
The scheme also has specifically excluded certain activities for which loans under PMEGP cannot be applied. Some of such activities are listed below.
- Restaurants, dhabas, hotels, outlets selling and serving alcohol
- Businesses engaged in meat serving and slaughterhouse
- Entities engaged in manufacturing/production/sale of tobacco, beedis, etc.
- Coffee, rubber plantations
- Sales and tapping of Toddy
- Sericulture, horticulture, floriculture, etc.
- Entities engaged in production and or cultivation of cash crops.
FAQs – PMEGP
1. Does the cost of land form part of the project cost?
No. Cost of Land is specifically excluded from project cost.
2. What is the minimum age requirement to qualify for PMEGP loans?
The applicant needs to be of minimum 18 years of age to qualify for PMEGP loans.
3. Is EDP training mandatory for PMEGP loans?
Yes. Entrepreneurship Development Programme (EDP) training of 0 days is mandatory for projects that cost more than Rs. 5,00,000 and for projects that cost less than Rs. 5,00,000, EDP training of 6 days is mandatory.
4. What is the minimum period or the lock-in period of the subsidy under PMEGP?
the minimum period or the lock-in period under PMEGP is 3 years.
5. What are the eligible financial agencies through which a person can apply for a PMEGP loan?
The eligible financial agencies that the person can apply for a PMEGP loan from are the 27 Public sector banks, Regional Rural Banks (RRBs), Co-operative Banks and Private Scheduled Commercial Banks that are approved by the respective State task Force Committee.