We have been receiving lots of queries from our readers about Prime Minister’s Employment Generation Programme (PMEGP). Some of the frequently asked questions are answered here.
- Q: I’m in the business of readymade garments, hosiery goods, other articles of clothing and clothing accessories such as gloves, ties, braces etc. Whether I’m eligible for loan under PMEGP?
Reply: You are not eligible for loan under PMEGP. The financial assistance is provided only to the first generation entrepreneurs in the form of margin money.
- Q : What is the last date for applying to loan under PMEGP scheme?
Reply: The State/Divisional Directors of KVIC in consultation with KVIB and Director of Industries of respective states (for DICs) will give advertisements locally through print & electronic media inviting applications at periodical intervals along with project proposals from prospective beneficiaries. The scheme will also be advertised /publicized through the Panchayati Raj Institutions which will also assist in the identification of beneficiaries.
- Q: Can you tell me on what basis should I choose the sponsoring agency (KVIC/KVIB/DIC)?
Reply: You need not worry about implementing agencies. Online submission of applications for loans under PMEGP is mandatory and no manual applications are allowed w.e.f 01.05.2016
- Q: DLTFC has sanctioned loan on the basis of my loan application. However, the bank is not ready to sanction the approved loan. What shall I do now?
Reply: The final sanction of the project and release of loan is done at the level of concerned Bank. The Bank will appraise the projects and take their own credit decision on the basis of viability of each project. Bank has the discretion either to sanction/decline a loan. In case the bank is declining your application, you may demand the bank to give the reason for declining in writing. If you feel the reason given by the bank is not a valid reason, you may complain the matter to the higher authorities of the bank, ministry, CEO of KVIC, CMDs of the concerned banks, RBI, etc.
- Q: Bank is insisting for collateral security for the loan under PMEGP. Is collateral security compulsory for PMEGP loan?
Reply: Banks may ask security for the loan sanctioned by them. However, no collateral security will be insisted upon by Banks in line with the guidelines of RBI for projects involving loan up to Rs.10 lakh.
- Q: I have received a message from DLTFC that my loan application has been preapproved. What is the next process?
Reply: The final sanction of the project and release of loan is done at the level of concerned Bank. The Bank will appraise the projects and take their own credit decision on the basis of viability of each project on receipt of pre-approved credit proposal from DLTFC. If the loan is sanctioned by the bank it would claim subsidy amount from KVIC. The online claim form will be automatically checked by KVIC for the fulfillment of two conditions (i) the date of release of the first installment is prior to the date of filing of Margin Money subsidy claim and (ii) the amount of the first installment released is more than the Margin Money subsidy amount claimed. KVIC will validate the subsidy claim and upload on to the Nodal Bank portal within 3 working days. Nodal Bank will transfer the Margin Money subsidy claim amount validated by KVIC to the respective financing bank branch within 24 hours of the receipt of validation.
- Q: How DLTFC appraises the loan application?
Reply: DLTFC will appraise the applications on the same methodology as followed by Banks for approval of the loan.
- Q: My proposed unit will be in a rural area. How will I get the population certificate?
Reply: The population records of rural areas are available with the revenue departments of the State/Union Territory. You may contact the revenue department of the jurisdiction where your proposed unit will be set up. You may also check up at Panchayat/Taluk office or KVIC/KBIB office and check up with them where you can get the certificate.
- Q: As a banker, we have to finance Rs. 20 Lakhs in Pmegp scheme. Please tell me how much amount worth of collateral we have to ask?
Reply: The value of the collateral security is insisted usually based upon the type of security. In the case of land and building the market value should be more than 25% to 50% of the loan value, considering the forced sale value of the property which will be less than the market value. Further, there is an element of accumulated interest charged on loan account which has also to be recovered by the bank.
- Q: I need a loan of Rs.25 lakhs. The bank is asking for security for the loan. I’m living in a rented house and don’t have any assets to offer as collateral security. How I will get the loan?
Reply: Banks do not insist for collateral security for loans up to Rs.10 lakh as per RBI guidelines. Since you need a loan of Rs.25 lakhs and you don’t have any security to offer, you may request the bank to consider CGTMSE guarantee for the loan to be released to you. CGTSME guarantee is available for the project beyond Rs.5.00 lakhs and up to Rs.25.00 lakhs. In case bank accepts CGTMSE guarantee you need not provide either any security or third party guarantee. However, you will have to pay a guarantee fee for the guarantee offered by CGTSME.
- Q: Whether the bank will immediately adjust the margin money (subsidy) received from KVIC to term loan account so that borrower can repay the reduced loan amount?
Reply: The margin money (subsidy) received by the bank will keep in special term Deposit account for a period of three years at branch level in the name of the borrower. No interest will be paid on the deposit and no interest will be charged on loan disbursed to the corresponding amount of the deposit. The deposit amount will be returned to the borrower after 3 years if the loan is promptly repaid otherwise same will be adjusted to the loan outstanding.
12. Q: I have applied for PMEGP loan through a finance company. The agent has sent me the approval of loan in PMEGP letterhead. Now he is demanding the deposit of money equivalent to my share of contribution to the project and three EMIs. Can I deposit the money with him?
Reply: KVIC /KVIB /DIC 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. As per my knowledge you have to apply for a loan online directly to KVIC on their portal. The loan will be approved by DLTFC and is finally sanctioned by the bank under their terms and conditions. Any money to be deposited towards your contribution, same shall be deposited in your bank account in the branch where you are availing a loan. So be careful while dealing with third parties. KVIC also clarified that loan applicants dealing through third parties are doing so at their own risk.
13. Q: What will be the interest rate of pmegp for girls?
Reply: Normal rate of interest is charged by banks to PMEGP loans as applicable to MSME loans. No special concession on interest provided to women beneficiaries.
14. Q: Can I get a loan under PMEGP schemes. I have done all Poultry farming training. Sir, I am eligible or not for this PMEGP schemes?
Reply: The activities like Dairy, sheep/goat rearing, piggery, poultry, etc. are not eligible for PMEGP loans. You may try with NABARD who extend loan support for livestock /animal husbandry development activities.
15. Q: I have applied for a loan of Rs.25 lakhs but I am sanctioned loan of only Rs.10 lakh. How can they reduce my requirement?
Reply: The amount of credit limit approved will be on the basis of the total cost of the project (i.e Cost of equipment plus requirement of one cycle of working capital) less owner’s contribution to the project.
There are On-line Grievance Portal and a Grievance Cell setup by the KVIC, HQ. The Grievance Cell will act upon the on-line complaints within 48 hours and direct the concerned State Officers to take necessary action. Applicant, if not satisfied with the recommendations of the Committee, can file a grievance against such rejection to the GM, DIC or State Director, KVIC of the concerned State, whoever is senior.
16. Q: Is it necessary to utilize the full amount of loan to keep the margin money already credited to the bank?
Reply: The Banks will claim Margin Money (subsidy) on the basis of projections of Capital Expenditure and working capital component shown in the project report and sanction thereof. If the capital expenditure is not fully utilised, when the project is ready for commencement of production, the proportionate amount of subsidy will be refunded back to KVIC. Similarly, Working Capital component should be utilized in such a way that at one point of stage it should touch 100% limit of Cash Credit within three years of lock-in period of Margin Money and not less than 75% utilization of the sanctioned limit. If it does not touch the aforesaid limit, a proportionate amount of the Margin Money (subsidy) is to be recovered by the Bank/Financial Institution and refunded to the KVIC at the end of the third year.
17. Q: My PMEGP Loan was approved for Rs.10 lakh for Paver Block project. I have taken suitable land on 30 years lease for the above purpose. But Bank Manager refused to release the loan as I do not own the land. Please guide.
Reply: There is no such restriction for granting any loan that the unit should be operated on an owned property. However, it is the discretion of the Bank Manager either to sanction or decline the loan based on the viability of the unit assessed by him. Once again convince the manager to sanction the loan. If he is not agreeable to sanction the loan ask him to give the reason in writing for declining the loan. If you are not satisfied with the reason given by the bank Manager, you may complain to the Head Office of the bank/consumer court/RBI/Ministry of Finance (Banking Division), etc.
18. Q: I am eligible for a subsidy of Rs.3.60 lakhs, but my bank has received only Rs.50000/-
Reply: The online claim form submitted by the bank will be automatically checked for the fulfillment of two conditions (i) the date of release of the first installment is prior to the date of filing of Margin Money subsidy claim and (ii) the amount of the first installment released is more than the Margin Money subsidy amount claimed.
The subsidy will be released by KVIC in one installment only. If the first installment is less than the margin money amount, the bank shall pay interest to KVIC on the difference (till such time loan amount becomes equal or exceeds margin money) between loan amounts released and margin money.
19. Q: How many days the preapproval of DLTFC takes to reach the bank?
As per District Level Taskforce committee (DLTFC) procedure, it is expected that within 48 hours or two working days of receipt of application, the nodal officer of KVIC, State KVIB and DIC will interact with you (applicant) personally on telephone or personal meeting and confirm the receipt/ acceptance of the application for preliminary scrutiny. The nodal officer will do all the required correction in the application in consultation/cross checking with you and also provide hand holding to you at every stage. They will appraise the applications on the same methodology as followed by Banks for approval of the loan. The DLTFC Committee will consider each application and make its recommendation on-line. The decision of the DLTFC will be conveyed on-line to the District Implementing Agencies (KVIC/KVIB/DIC) within 3 working days of the meeting electronically. The concerned Agency will within 48 hours of the receipt of a decision of DLTFC forward the recommended application to the concerned Banks. This entire process has to be completed within 45 days of receipt of application online. There shall preferably be no interviews by the DLTFC, however, if considered necessary DLTFC may call the applicant for personal interaction/interview. If the DLTFC does not clear within 45 days, the Banks can appraise the projects on their own. In case of rejection, the reasons for rejection should be clearly conveyed to the applicant.
20.Q: sir plz suggest me any finance company provide this pmegp loan in the online process.
Reply: 27 public sector banks, RRBs, SIDBI, and State Level Task force approved co-operative banks and scheduled commercial banks are the institutions lend loan under PMEGP scheme. Do not approach any other financial institutions /agencies for PMEGP loan.
21. Q: Sir I want to start a new business in the manufacturing sector. I want 25 lakh. Loan. I don’t have collateral.land or house. Pls suggest how I can apply and get the loan And which scheme is useful for me
Reply: Request the bank for CGTMSE guarantee for the loan released by the bank. If CGTMSE guarantee is taken for your loan, no collateral security or guarantees required.
22. Q: Sir, I am from Itanagar Arunachal Pradesh. Please its a humble request to you to help me figure out the scheme. As I can’t find any department regarding the Pmegp loan, there are no concerned authorities out here, and I’m really unable to do the presentation/project. Even though there is a branch visible on KVYC/PMEGPofficial website for Arunachal. Please help me out by providing some link or something so that I can approach. Thanking you
Reply: 27 public sector banks, RRBs, SIDBI, and State Level Task force approved co-operative banks and scheduled commercial banks are the institutions lend loan under PMEGP scheme. Do not approach any other financial institutions /agencies for PMEGP loan. You need not search for any authorities, apply for the loan through on-line to know more click the following link.
23.Q: is it mandatory to approve the project from CA for pmegp?
Reply : No need for a CA for preparing the project report. visit KVIC official website. you will get the readymade format for various types of projects.
24. Q: I am from Assam. We do not have Aaadhar in Assam yet. How can I apply Sir?
Reply: In case no Aadhaar number is available Pan Card of the individual/ Enterprise or operational Bank account number of the institution may be furnished.
For details click the following link
25. Q: Hello Sir. I am willing to start a gaming arena (family entertainment center). Will this be approved under PMGEP scheme? Plz, suggest.
reply; As per KVIC guidelines, PMEGP is applicable to all new viable micro ventures except activities indicated in the negative list of village industries. The proposed business does not come under negative list.
26. Q: Whether I and wife take PMEGP loan separately?
Reply: Only one person from one family is eligible for obtaining financial assistance for setting up of projects under PMEGP. thefamily includes self and spouce.
Related article: “Bank finance under PMEGP scheme”
Disclaimer: This article is only for general information. The scheme rules/guidelines may be changed by the Government from time to time. The clarifications or interpretations if any available from DIC, KVIC, KVIB are final. The author of this article is not responsible for the mistakes, errors, ambiguity, inconsistency, discrepancy, doubts or quality of ithe nformation provided in this article.