PMEGP – Guide (PMEGP Loan, Online Application)

May 31, 2023

17 min read

Overview:

PMEGP’s full form is Prime Minister’s Employment Generation Programme which commenced on 31st March 2008 by merging the earlier PMRY (Prime Minister Rozgar Yojana) and REGP (Rural Employment Generation Programme). It was a measure to integrate the two programs with similar goals to concentrate on a unified effort to encourage the youth to create micro-enterprises in the country’s rural and urban sectors. The Ministry of MSME (Micro Small and Medium Enterprises), Government of India is vested in the program’s administrative control.

The implementation of the PMEGP has been entrusted to the KVIC (Khadi and Village Industries Commission) at the national level and their directorates and boards at the state and DIC at the district level. It is primarily a credit-linked subsidy provided to boost employment among the youth of the country by indulging in the business of manufacturing and services by setting up new ventures. To comprehend the scheme’s nuances better, it is imperative to delve into the PMEGP scheme details in greater depth.

Features of PMEGP Loan Scheme:

The basis of the PMEGP scheme is the provision of subsidies for starting a micro-enterprise to make the project viable through the extension of credit in the form of a PMEGP loan. The various features marking this vital initiative are:

Objectives: The primary objective of PMEGP KVIC is to combine its four-fold encompassing the following.
- To open up employment opportunities in rural as well as urban areas by helping establish new micro-enterprise projects.
- By integrating the widely spread artisans and unemployed youth in the country into a combined effort toward self-employment avenues.
- Prevent the migration of rural youth to urban centers in search of sustainable employment by boosting traditional vocation throughout the year.
- To augment the income of traditional artisans in rural areas by providing means of self-employment.
Quantum of Loan: Being under the overall formula applicable to MSME, the PMEGP guidelines specify amount restrictions in the following form:
- Manufacturer: Rs.25 lakhs maximum.
- Services: Rs.10 lakhs maximum.
Self-Investment: It is determined depending on the location of the enterprise.
- Plains: Maximum Rs.1 lakh.
- Hills: Maximum Rs.1.5 lakhs.
PMEGP loan details: The fundamental parameter can be broken up as follows for a comprehensive picture of the subsidy granted for the PMEGP application:
- The specified category includes people belonging to SC/ST/OBC, women, physically challenged, Ex-Defence Service Personnel, and North East, and Border Areas, among others.
- The funding gap is provided as the Term Loan by the banks.

Pattern of subsidy to determine proportion of funding of the project cost
Category	Self-share of project cost	Subsidy provided by the Government
Category	Self-share of project cost	Urban	Rural
General	10%	15%	25%
Special	5%	25%	35%

PMEGP Loan Tenure: The Term loan has a repayment period of between 3 and 7 years. The moratorium period uniformly extended by the banks is 6 months.
Allocation Ratio: The proportionate allocation of the PMEGP loan bears the following pattern:
- The subsidy is treated as the margin money and is proportional to the capital expenditure of the borrower. The surplus if any is returned to KVIC.

Category of borrower	Ratio of Project Cost funded by bank	Margin Money (Subsidy)
Category of borrower	Ratio of Project Cost funded by bank	Urban	Rural
General	90%	15%	25%
Special	95%	25%	35%

PMEGP Loan Interest Rate:

The interest rate applicable as per the bank’s norm for MSME enterprises is 11% and 12% pa. However, under the provisions of the ISEC (Interest Subsidy Eligibility Certification) Scheme, the applicable interest rate is a concessional 4% for a mix of Working and Fixed Capital expenses. The differential with the regular interest rate is made good by the KVIC under the “Grants” head of the budget. This facility is limited to members involved in the production of Khadi and Polyvastra only.

Eligibility Criteria for PMEGP Loan:

The loan facility is extended to individuals and organizations meeting the specific norms for eligibility for PMEGP application:

The age of the Individual should be over 18 years.
Individuals should have cleared the class VIII examination of the school.
For individuals, the size of the project must meet the following criteria:
- Manufacturer: Over Rs.10 lakhs.
- Service: Over Rs.5 lakhs.
Self-help groups are eligible if they have not availed of any other scheme benefit.
Registered Societies.
Charitable Trusts; and
Cooperative societies are involved in the business of production.
No income ceiling is applicable for availing of the loan.
The loan facility applies only to new ventures and those who have not enjoyed and benefited from similar schemes in the past.
List of eligible activities: The loan is restricted to only activities specifically approved eliminating those that fall on the negative list.
- Approved List:
  - The food processing provided is agro-based.
  - Hand-made paper and fiber production.
  - Products are sourced from forests, minerals, chemicals, and polymers.
  - Biotechnology and Rural engineering.
  - Service and textile products.
- Negative List:
  - Meat and slaughterhouse.
  - Restaurants and Dhabas offer liquor.
  - Tobacco and similar products.
  - Sales and tapping of toddy.
  - Activities involving cash crops.
  - Horticulture, floriculture, etc.
  - The list is only suggestive and not inclusive.

Documents Required for PMEGP Online Application:

The PMEGP loan sanction process can be initiated by accessing the PMEGP portal only, which is a dedicated digital interface provided by KVIC. The list of documents required is elaborate matching the requirements of the banks for a seamless process.

All KYC documents of the borrower for the information input into the PMEGP e portal that includes the Aadhaar, PAN, EPIC, etc.
Caste or community certificate to fit the properly defined category.
A claim to the appropriate subsidy.
Project cost represents the break-up of one cycle consisting of capital Expenditure and Working capital component.
A certificate from the controlling office of the bank specifies the absence of the need for working capital.

Procedure for PMEGP application:

The borrower must invoke the portal for PMEGP online application procedure – https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp. The inputs required to complete the process may be split into three phases. In the first phase, the personal details are input. The second has the facility enter all the information pertaining to the PMEGP status, including PMEGP Loan Limit desired.

The account details of the bank are also mandatorily sought. Once this process is over, the application is to be saved for invoking the third step – the submission of documents in the digitized format. Only on completion of all three phases, the application can be finally submitted for evaluation. An application acknowledgment ID and password are messaged to the registered mail ID for future use.

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We offer a range of credit products to cater to different target categories that make Lendingkart a choice destination for the prospective borrower who is interested in a hassle-free, seamless experience. The redeeming feature of our loans is that they are free of any collateral requiring minimal documentation. For more information, contact info@lendingkart.com freely or visit – lendingkart.com.

Bottom Line:

PMEGP is the flagship initiative of the Government of India, has a broad canvas to work upon towards the generation of employment opportunities, primarily impacting the traditional modes of sustainable living. The successful implementation of the scheme envisages multiple agencies’ involvement right to the grassroots of governance, including the Panchayats for identifying the prospective beneficiaries. The PMEGP scheme’s success will ensure a large section of unemployed youth indulge in gainful employment and ensure demographic stability of the rural and urban sectors in the country.

PMEGP FAQs:

1. Is there any lock-in period prescribed for the margin money?

Yes, the margin money which is also the subsidy component of the Project Cost is locked in for 3 years. It is reserved in a separate SB account subsequently offset against the overall PMEGP loan limit, subject to the utilization of funds as per bank’s requirements.

2. How is the expenditure on rent/lease and land for the unit treated as a component of the Project Cost?

The cost of rent or lease, if it is not greater and 3 Years in age, is treated the component of the Project Cost. However, the cost of land does not qualify as a legitimate component of project cost.

3. How has the scheme fared in the last few years?

The following grid is indicative of the statistical proportions of the achievement of the PMEGP as a whole derived from the PMEGP e Portal.

Financial year	Application Received (Number)	Forwarded to banks (Number)	Sanctioned by banks (Number)
2016-17	405055	149929	37503
2017-18	442007	271782	68663
2018-19	389589	253002	60663
2019-20	102646	26450	5426

4. What are the security provisions in loans granted under the PMEGP scheme?

As per the RBI guidelines defined for PMEGP loans, the need for collateral security is waived for units with project cost up to Rs.10 lakhs. On the other hand, there is a provision for CGTSME providing a guarantee which is equivalent to collateral for units with project cost in the range of Rs.5 lakhs and Rs.25 lakhs under the scheme.

5. Under the PMEGP loan scheme, is there a provision for borrowers proposing multiple units?

The provision of the scheme permits only one unit per borrower.

PMEGP News

DIEPC approves Rs 2.48 cr subsidies for 55 industries in Tirupati

55 businesses in the Tirupati area would receive Rs 2.48 crore in subsidies from the DIEPC, subject to timely PMEGP loans and safety requirements. LDM must ensure banks are grounded under PMEGP, with 57 proposals approved and 55 industries receiving incentives. Officials held awareness campaigns to ensure safety standards in the workplace, including the Deputy Chief Inspector of Factories, APIIC Zone Manager, LDM Subhash, and DRDA PD AD Jyothi. AP Chambers expressed happiness over the announcement of the new Industrial Policy 2023 and thanked the State government for considering its suggestions. MSME units are still waiting for incentives. Government releases incentives to help the MSME sector grow.

News Updated Date: 31st March 2023

Centre Releases Rs 100.16 Cr PMEGP Subsidy in Haryana

According to the MSME (Ministry of Micro, Small, and Medium Enterprises), the Centre has generously set aside a margin money grant of INR 100.16 crore to 2989 beneficiaries. These come under the PM’s Employment Generation plan. The two respective beneficiaries in Jhumpa and Bhiwani in Haryana have also sanctioned INR 298.44 crore from the banks. This initiative can create about 24000 job opportunities. Manoj Kumar, the chairman, believes that PMEGP is instrumental in achieving Prime Minister Modi’s goal of ‘Atmanirbhar Bharat’ through this employment generated for artisans at low cost. He adds that this will upgrade skills and improve the economic and social status of maximum artisans by providing them with tool kits. The PMEGP also offers free entrepreneurship training to beneficiaries.

News Updated Date: 28th March 2023

KVIC Releases Rs 100 Cr Subsidy to Over 3000 Beneficiaries Through PMEGP

Prime Ministers’ Employment Generation Programme (PMEGP) is a credit and finance scheme designed to support the establishment of new small and medium scale enterprises (MSMEs). Launched in 2008 by the Khadi & Village Industries Commission (KVIC), the scheme has been extended till the 15th Finance Commission cycle from 2022 to 2026 with an outlay of Rs 13,553 crore. Under the scheme, aspiring entrepreneurs are eligible for a credit up to Rs 50 lakh for launching their new manufacturing unit, and up to Rs 20 lakh for new service units.

Recently, KVIC Chairman Manoj Kumar released the margin money of Rs 100.63 crore to 3,083 beneficiaries under PMEGP with a sanctioned loan of Rs 296.19 crore for PMEGP projects (new enterprises). This will create employment opportunities for around 25,000 people across India – making it difficult for more individuals to achieve their dreams of starting a business.

The scheme is a great opportunity for aspiring entrepreneurs looking to enter into MSMEs since it provides both credit and financial support needed to launch their businesses. This move by KVIC is a welcome step towards encouraging entrepreneurship in India and supporting MSMEs in achieving success.

News Updated Date: 07th March 2023

PMEGP to give a new look to traditional businesses

Through providing subsidized loans, the Prime Minister’s Employment Generation Programme (PMEGP) assists in giving traditional enterprises a new lease on life. At Visuvasapuram in Kommadikottai close to Sathankulam, a district-level awareness camp was held. According to Chelian, artisanal and traditional companies will particularly profit from the PMEGP program. According to him, there is no minimum age requirement or enrollment requirement to apply for loans through the KVIC. The scheme offers a maximum of Rs. 50 lakh for companies based on output and Rs. 20 lakhs for businesses based on services. District Industries Centre (DIC) and Mother Social Service Trust coordinated the event (MSST).

News Updated Date: 12th January 2023

21640 units established under PMGEP in J&K during the last fiscal

Jammu Kashmir has claimed to have established 21,640 units under the flagship scheme Prime Minister’s Employment Generation Programme (PMEGP) during 2021-2022, which created the highest number of employment PMEGP is a credit-linked subsidy program administered by the Ministry of MSME, excellence of successful entrepreneurs of the scheme.

An official attributed this employment spree to the Prime Minister’s vision for all-round development and self-sustainability of Jammu & The record number of PMEGP units in J&K is also a testimony of It is noteworthy that in 2021-22, a majority of the PMEGP units in As many as 16,807 (78%) of the 21,640 PMEGP units in J&K Prime Minister’s Employment Generation Programme) Scheme “I approached the Jammu, and Kashmir Khadi and Village convinced me about the PMEGP Scheme and thus, activated the Ministry of MSME is implementing the Prime Minister’s Employment Generation Programme (PMEGP) since 2008-09 through Khadi and different schemes under Jammu and Kashmir Khadi and Village Rs 3000 to Rs 25, 000 per month.

News Updated Date: 16th December 2022

Modi Govt’s PMEGP Scheme Enables Over 25,000 New Enterprises, Over 2 Lakh Jobs In H1 FY23

According to official data, the Prime Minister’s Employment Generation Programme (PMEGP), a government program that offers financial support to people starting new businesses, has so far enabled 25,105 new units with a subsidy extension of Rs 802 crore and created 2,00,840 jobs. According to the most recent information on the MSME dashboard, the half-year performance has already surpassed the 1,406 enterprises established and the 11,776 jobs created in FY22. The amount of margin money offered was Rs 64 crore.

Self-help organizations, production co-operative societies, charitable trusts, etc., are also eligible; however, PMEGP does not apply to organizations that already operate under other government programs, such as Pradhan Mantri Rozgar Yojana, Rural Employment Generation Programme, etc., or that have previously received government assistance under any other program. Significantly, with an investment of Rs 13,554.42 crore, the government extended the program over the 15th Finance Commission Cycle from 2021–2022 to 2025–2026. According to the government, in five fiscal years, the extension will generate 40 lakh sustainable employment opportunities.

News Updated Date: 31st October 2022

72 Units Are Introduced Under The PMEGP By Union Minister Narayan Rane

New Delhi, September 19, 72 units were funded by the Prime Minister’s Employment Generation The program was inaugurated by MSME Minister Narayan Rane. In the presence of Manoj Kumar, chairperson of the Khadi and Village Industries Commission, Rane also distributed margin money subsidies to 720 PMEGP recipients at the KVIC office in Mumbai.

The Ministry of MSME’s flagship program run by District Industries Centers and KVIC was introduced in September 2008 under the Prime Minister’s Employment Generation Programme (PMEGP), combining the previous Rural Employment Generation Programme (REGP) and the Pradhan Mantri Rojgar Yojana (PMRY).

News Updated Date: 29th September 2022

UP Surpasses PMEGP employment targets

The state of Uttar Pradesh has done extremely well in providing jobs as well as helping young entrepreneurs to set up their own industrial units. The actual performance against the set targets has been summarised in the table below

PMEGP Scheme	Target	Achievement
Jobs	15000	16257 (108%)
Setting up of small industrial units	1850	1636 (95%)

The actual achievement against the set PMEGP (Prime Minister’s Employment Generation Programme). These targets for the second quarter of the financial year 2022-23 were achieved in the first quarter itself.

Rs 6 crores out of the total allocated Rs 7 crores have been spent on financing the youth with business startup loans from 10 lakhs to Rs 25 lakhs along with 35% subsidy.

This is an impressive start to the present financial year and a committed Yogi government appears serious to fulfil its promised target.

News Updated Date: 9th August 2022

The Government Decides to Extend the PMEG Scheme, with an outlay of INR13554 crore

The government has decided to extend the PMEG (Prime Minister Employment Generation) scheme for five years. It also got an outlay of INR 13554 crore. The scheme has also undergone drastic changes.

The government has approved the decision to extend the PMEG scheme over the 15^th Finance Commission cycle for five more years. It implies that the scheme will receive a new lease of life; from 2021-2022 to 2025-2026. It will also receive an outlay of the amount mentioned above.

Since its inception in 2008-2009, PMEG has given new leases of life to up to 7.8 lakh small-scale entrepreneurs. And it has spent INR19995 crores as sponsorships to such firms. As per the estimates, 80% of the beneficiaries were from provincial regions. The remaining 20% went to SC, ST, and women. The scheme has also undergone further changes. The grant allowed for each section got doubled. There are also certain changes in the definition of the categories of entrepreneurship in the scheme.

News Updated Date: 9th June 2022

Uttar Pradesh grows into the first state that offers the largest investment and employment

On April 6^th, Uttar Pradesh became the first state in India to provide maximum investment and employment under the Prime Minister’s Employment Generation Program (PMEGP). This accomplishment is credited to Chief Minister Yogi Adityanath, who made it possible regardless of all the backtracks and hurdles. With more than 21 schemes in place, the state has upraised to become 2^nd in the ranking of business ease.

INR 4.68 lac crore worth of investments have poured in, which is the highest compared to the previous regimes. According to the Additional Chief Secretary MSME, Dr. Navneet Sehgal, there has been a 110 percent increase in PGEMP and a 15 percent subsidy. The District Industries Centre, Khadi, And Village Industries Commission and Board collectively gave about INR 336 crores against the INR 334 crores goal.

News Updated Date: 26-04-2022

74,415 New Micro Enterprises Started in 2021 Under PMEGP: MoS MSME

As many as 74,415 new micro-enterprises were set up in the fiscal year 2020-21 under the Prime Minister’s Employment Generation Program (PMEGP), said Minister of State for MSME Bhanu Pratap Singh Verma. It is estimated that 5,95,320 employment has been generated in the same year through these new enterprises. New enterprises established in FY21 were 11% more than in FY20 and 1.34% from FY19.

Similarly, there was an increase in the employment generated under PMEGP in FY21 in comparison to FY20 & FY19. PMEGP is a central government scheme that promotes entrepreneurship and generates employment through financial assistance, implemented by the Khadi & Village Industries Commission (KVIC). It offers maximum assistance of Rs 25 lakh for setting up new manufacturing units and Rs 10 lakh for new service units. It allows anyone above 18 years of age and at least a VIII grade pass to apply for assistance.

News Updated Date: 13-04-2022

Jammu & Kashmir bags 4^th position under Khadi India Award for the financial year 2020-21

Having implemented the prime minister’s employment generation program for the financial year 2020-21, J&K Bank was awarded the 4th position in India under the Khadi India Award by the government of India for its distinguished pan-India performance.

Rajesh Malla Tikoo, Zonal Head Mumbai, accepted the award on behalf of J&K Bank. MD and CEO Baldev Prakash appreciated the government’s support and stated that the bank secured the position due to its commitment as the premier financial institution for implementing PMEGP. He also added that the recognition given to this bank further pushes it to empower people financially. Thus, they can participate in the other growing economy of the country through the government’s effective execution of flagship economic programs. Through the sponsored schemes launched by the Indian government, the bank will accomplish its mission to empower people financially. For 2020-21. Within the next financial year, the Bank will sanction 12455 PMEGPs with a loan limit of Rs 797.37 Cr.

Updated Date: 02-03-2022