Guidelines for the PMEGP 2 loan For the expansion of existing PMEGP_MUDRA_units

PMEGP 2 Loan Expansion Of Existing Units

Specification for PMEGP 2 Loan Financial Aid to Prolong Existing Active PMEGP / MUDRA Units. Importantly the Government of India approves to introduction of a new credit links subsidy program named the PMEGP scheme.

Moreover, the revision of the Prime Minister’s Employment Generation Program with PMEGP 2. Including combining the two schemes, which are the Prime minister’s Rojgar Yojana and Rural Employment Generation Program. This means these two schemes were in operation from 31.03.2008. Both hold the same objective to create job opportunities by setting up micro-enterprises in rural and urban areas. So, this article is going to understand the PMEGP 2 in detail.

PMEGP 2 Loan Expansion Of Existing Units

KVIC that is Khadi & Village Industries Commission, is executing the PMEGP and the national-level Nodal Agency. KVIC now is the legal body under the Ministry of MSME, Government of India, New Delhi.

At the State Level, the scheme is executed by the State KVIC Directors. Including the State Khadi & Village Industries Boards (KVIBs), District Industries Centres (DICs), and Banks. Also, up to 31.3.2018, a sum of 4,66,471 units is set up in the Country. Given the performance of the project and demands by the entrepreneurs or unitholders. And also suggested by the Management Development Institute (MDI), Gurgaon.

The Government confirms in its Evaluation Study Report the maintenance of PMEGP for three years from 2017-18 to 2019-20. With a financial outlay of Rs. 5,500 Crores beyond the 12th five-year Plan.

Also, a provision is formulated for allowing the 2nd Loan with a subsidy for the upgrading of existing units. That performs well in terms of sales, profit-making, and repayment of loans while providing such approval.

Therefore, manufacturing units get Rs. One crore amount as a financial. Also, for Service/Trading Units receives the financial support of Rs.25 lakhs with a subsidy of 15% (20% for NER and Hilly States).

Objectives of PMEGP Loan 2 Second

Objectives of PMEGP Loan 2

  • Firstly, to satisfy the need for additional financial assistance. For efficient or well-performing units need up-gradation and expansion.
  • Secondly, to meet the needs of entrepreneurs to add new technology. Including automation to the current unit to modernize it. 
  • Improving the efficiency and productivity of the existing units with the inclusion of an additional dose of funding.
  • Growing the current unit’s potential with additional financial assistance to ensure additional wage jobs.

Quantum and Nature of PMEGP 2 Loan

2nd Loan to upgrade the new PMEGP / MUDRA units:

a) The total project/unit cost allowable in the manufacturing sector for Up-gradation is Rs.1. Crore and Rs.15 Crore are the highest subsidy Lakhs (for NER and Hill States, Rs.20 lakhs).

  • Beneficiaries categories: All Categories
  • The beneficiary’s contribution to the project costs 10% (of the proposed development or up-gradation cost.
  • Rate of Subsidy: 5% (20% in NER and Hill States).

(b) Rs.25 lakhs applicable to the highest cost of the project or unit suitable. For upgrading in the service/trading market, the overall subsidy applicable is Rs. 3.75 lakhs (for NER and Hill States, Rs. 5 lakhs).

(c) The subsidy rate (of project cost) is 15 per cent for all groups (20 per cent in NER and The Hill States). Also, for both groups, the beneficiary’s contribution is about 10 per cent.

d) The balancing amount of the entire project cost provides by the Bank as a term loan. The applicant can use the loan amount for investment in fixed assets. That is for the construction of a building or buying of important new machinery/Installation of machinery etc.

e) Under the term loan element of the construction of a building or industrial shed, machinery & equipment, etc. includes. The construction of own buildings can include, and the ceiling of construction must not usually exceed 25% of the total sanction project cost.

Eligibility Requirements for PMEGP2 Two loan beneficiaries

Eligibility for PMEGP loan beneficiaries

  • The benefits are available for all existing units financed under the PMEGP / MUDRA scheme. Whose margin money claim includes modification, and the first Loan is used as repaid within a particular period.
  • For the last three years, the unit must make money.
  • Also, the beneficiary may apply to the same funding bank that provided the first Loan. Even it can be any other bank that is willing to extend the second Loan to the credit facility.
  • The Udyam Registration is compulsory. 
  • The 2nd Loan can contribute to the generation of additional jobs.

Performing Agencies under PMEGP 2 Loan

(a) KVIC implements the scheme. The Statutory Body continues by the 1956 Khadi and Village Industries Commission Act, which establishes a single national Nodal Agency.

b) At the State level, the scheme is implemented by State Directors of KVIC, State KVIBs, and District Industries Centers in rural areas. In urban areas, the scheme is implemented by the State District Industries Centres (SDIC) only. KVIC can agree with State KVIBs and state DICs, and monitor the completion of the Units in both rural and urban areas.

KVIC and DIC may also involve NSIC, MSME-DIs, RSETIs, RUDSETIs, ITIs & other similar Institutions. Including the Panchayati Raj Institutions and other Ngo’s identification of beneficiaries under the scheme. The Coir Board can be involved in knowing the coir units for their enhancement, mentoring, and handgrip.

Financial Institutions For PMEGP 2 loan

a. Every Public Sector Bank

 b. Every Regional Rural Banks

 c. Cooperative Banks supported by State Level Task Force Committee managed by Principal Secretary (Industries/MSME)/Commissioner (Industries).

 d. Private Scheduled Commercial Banks allowance by State Level Task Force Committee managed by Principal Secretary Industries or MSME.

 e. Small Industries Development Bank of India (SIDBI)

Steps to apply for PMEGP 2 loan
Steps to apply for PMEGP 2 loan Online

Step 1 :

Firstly you must know that the existing users and units applicable to get selected from all over the Country. So, on the PMEGP e-portal, a separate form link is there for submitting an application by the existing units for up-gradation.

Step: 2

Following preliminary review by the KVIC / KVIB / DIC shall ensure, before recommending the application to the banks, that the application is complete in all respects and that the applicant meets all the requirements set out in the Guidelines.

Thereafter, shall forward the request to the bank. So, If the application is not in order, they will return the application within 15 days, along with its reasons.

Step :3

The bank reviews and approves the proposal. Thereafter, the release of the Loan and Margin Money Subsidy (MMS) hold by the Bank. However, Bank as per the prevailing practice for PMEGP units. For 18 months, the MMS was held as a Term Deposit Receipt (TDR).

No interest in the TDR is applicable to pay. Also, no interest in the corresponding amount of the Loan disbursed charges.

However, after installing the machinery and inspection by the agency and the Bank, the TDR balance was transferred into the loan account.


However, to track all stakeholders, a separate MIS for the 2nd dose of financial assistance mentions the PMEGP e-portal.

Step 5:

The unit’s joint physical verification is carried out by the implementing agencies and the banks at least twice a year. Also, the details of the joint physical verification are available on the portal. KVIC will also do the geo-tagging of all the devices.

Step 6 :

In addition to the above, physical verification by third parties is carried out by KVIC by outsourcing to an independent contractor upon completion of a year.

Step 7 :

CGTMSE Coverage

By paying the CGTMSE fees, the beneficiary can choose to cover the project under the CGTMSE Scheme.

Documents required For PMEGP Loan 2
  •  Past ‘loan sanction letter’ provides by the Bank. 
  • The proof of ‘MM claims set against the previous loan.’
  • ‘Bank Certificate for complete loan repayment.’
  • Project report for development and improving the unit.
  • Passport-size photograph.
  •  IT returns for the last three years. 
  • Annual accounts verify by CA for the last three years.

The primary aim of the system is to assist the well-performing units in updating the units. Also, the second financial assistance refers to the other points already met by the current PMEGP program.

Relating to the beneficiary units’ eligibility, the negative list, and also the process for requesting the banks’ margin money. Also, the release of the margin money subsidy by the current e-poThethe preservation of the subsidy in the TDR.

However, remember to ensure that the second financial support only applies to the development/upgrade of the well-performing PMEGP/MUDRA units’ existing/related activities.

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