PMEGP Loan Rejection Letter

PMEGP Loan Rejection Letter and Reasons

Your bank can deny to give you a PMEGP bank loan by sending you a PMEGP Loan Rejection Letter. The central government of India has been trying hard to increase self-employment in the country by funding young entrepreneurs so that they can start their ventures and enjoy a sustainable living.

Around 7.5 lakh youth has enjoyed the benefit of the PMEGP credit-linked subsidy scheme and have become successful entrepreneurs. More than 4 lakh youth apply for the PMEGP Loan scheme in India but around 10 to 15% of PMEGP loan application Forms are selected and provided financial aid.

 The Purpose of the PMEGP loan is to generate employment opportunities. So any individual who is 18 or above 18 years of age can get a PMEGP loan. PMEGP loan eligibility criteria are helpful to you as you can check the chances of your loan approval.

You can therefore avail loan that amounts to Rs 5 lakh or 10 Lakh for your business set up and up to Rs 25 Lakh if you want to be a manufacturer. Among crores of loan applications under PMEGP, only lakhs get selected under PMEGP loan subsidy at the district level that is headed by the collector. Banks have their criteria for providing loans and you must accept their decision.

Thousands of loan applications are pending on the DLTFC. Once the loan is applied online, you receive a call from the concerned department to confirm your loan application and further, the process starts.

If your PMEGP loan application is not accepted as you don’t match the eligibility criteria you receive a PMEGP Loan Rejection Letter that says your loan is rejected by the PMEGP department.

PMEGP Loan Rejection Letter

When your PMEGP loan application doesn’t get approved it means it is rejected and you will not be able to get the Loan. In this case, you get a letter from the PMEGP department that is PMEGP Loan Rejection Letter.

The loan application gets rejected due to multiple reasons. They may get rejected due to small mistakes or a lack of important eligibility documents. A common mistake that an applicant does while submitting the PMEGP loan application form is in documents. The PAN number usually doesn’t match the Aadhar card and thus your PMEGP loan application is rejected.

DLTFC is functional in every district of India so that PMEGP can function effectively. It is headed by the Magistrate of the District and the committee comprises the general manager of DIC which is the district industry centre and is the official of Leading Bank of the Khadi Village Industries Department.

DIC works primarily the scrutinizing PMEGP loan applications so that PMEGP can facilitate loans to the young entrepreneurs in the Country.

When the bank rejects your PMEGP loan application, it may have its reason for rejecting your loan application.

  • The PMEGP Project Report that the applicant submits as the mandatory document with the loan application form is at times not considered viable by the bank. Thus your PMEGP project report should be professionally created. For this, you can take our help as our team provides you with customized PMEGP project reports.
  • The PMEGP might send you a PMEGP Loan Rejection letter if it finds that your cibil report is absent
  • and there are some factual errors in your loan application.
  • If you lack documents and business knowledge you have to face rejection.

Reasons For PMEGP Loan Rejection Letter

One faces difficulty in accepting the rejection. You might feel dejected or disappointed if your PMEGP loan application gets rejected. The word No is negative and hurts everyone’s feelings.

When it comes to loans and getting funds, the lending institution seems to be very cautious while granting loans to individuals to avoid future risks and bad debts. Thus a bank follows the painstaking procedure.

You can consider the following measures and suggestions that can help you prevent your PMEGP Loan from getting rejected.

Low Cibil Score

Cibil score proves that your financial transactions run smoothly. Having a poor Cibil Score has negative impacts on your PMEGP loan application for business and your loan is likely to get rejected.

Cibil Score is a 3-letter number that needs to be maintained above 700 from 900 at any cost. If you maintain your Cibil Score you can get a loan at a lower rate of interest. The applicants who have a Cibil Score below 650 or near 500 face the PMEGP loan rejection in India.

Thus it is important to maintain a sound Cibil Score so that you can avail the benefit of the government PMEGP Loan scheme to get a loan for your new business set-up.

Lack of Effective PMEGP Project Report

An effective project report for PMEGP is the business plan that you make for your business and present before the bank. If you lack an effective business plan your PMEGP loan application tends to reject.

Every loan lending bank needs to know about what business you are availing financial help to. To show your plan, you need to create a concrete well-drafted PMEGP Project Report that is ready and well presented while submitting the PMEGP loan application form.

If you do not present the business plan in the right manner it gets difficult for the financing body to give you a loan. If your project lacks important information, you will not get the PMEGP Loan. Thus it is a dilemma, risk and confusion for the banker to give you a loan if the details you provide are inappropriate.

Incomplete PMEGP Loan Application Documents

While you submit the PMEGP Loan application form you have to submit all important documents that make you eligible for the loan. These documents are specified by the banker who is giving you the loan.

Thus all the authentic and right documents must be submitted along with the important details in the application form. The false, incomplete, missing or forged documents should not be submitted because the lending institution verifies all your documents.

During verification, if you are caught submitting forged documents, the loan gets rejected.

Collateral or Insufficient Cash Flow in PMEGP Loan

Cash flow is the backbone of every business. It is the primary source with which the banker judges your repaying capacity. If you have insufficient cash flow, the bank doesn’t trust you. It simply rejects your PMEGP Loan application.

It is important to have a proper cash flow. This you can do by arranging the right invoices and removing extra expenses.

Every bank doesn’t offer unsecured business loans. It asks you to keep collateral security with the bank. For the new startups, the entrepreneurs and business units who wish to apply for a PMEGP loan need to keep collateral with the bank. It is thus mandatory for the entrepreneurs to arrange for it.

If the collateral arranged by you is insufficient, the bank shall reject your loan. The collateral that you can submit to the bank can be your warehouse or residential papers, raw materials, machinery etc papers too.

Applicants or Start-ups with new credit

If you are just entering into business and don’t know much about it, the bank shall give you a PMEGP loan Rejection Letter as you lack knowledge. New To Credit are the candidates who have no present or past credit usage and do not even maintain the CIBIL Score.

The applicants thus face a little more difficulty in starting their venture by availing of the bank loan. Their loan approval is difficult because the bank grades them as high-risk applicants.

Therefore applicants who are new to credit and are not very familiar with the bank rules should begin with using basic lending products like maintaining FDs or credit cards.

While using a credit card you must have a high credit utilization ratio that is more than 30% of the total available limit.

High-risk Business

The financial institution that lends funds to you thinks several times before sanctioning your loan application. If your business involves high risk, that is if it has factors that affect your business, will surely affect the nation’s economy too.

The banks usually lend loans to every green business making you earn throughout the years even in the time of natural calamities or pandemics. Otherwise, it is difficult for the lending institution also to give you a loan. A bank usually finds it difficult to provide loans to start a salon, gym, cinema, restaurant, hotel, shopping mall etc.

The reason is just that the environment or economic situations do not allow this business to start and flourish in the long run. These businesses are considered high-risk for lending institutions.


The loan lending financial institutions that are both public and private, non-banking, small finance banks, Microfinance institutions or regional rural banks, do not wish to provide loans to customers who don’t have a smooth financial history or wish to avail of loans for a high-risk business.

Since PMEGP is a government scheme, the banks usually wish to provide loans to applicants who wish to start their business under this scheme but if the business involves risk then the lender refuses to give a loan.

Thus there are some norms and terms that are set and defined by the RBI and the financial institutions abide by those rules for the proper regulation and functioning of the country’s banking system.

Leave a Reply

Your email address will not be published. Required fields are marked *