‘PMEGP’ stands for Prime Minister’s Employment Generation Programme. This is a credit-linked subsidy program that started in 2008. This is a combined form of two earlier schemes, viz. Prime Minister’s Rojgar Yojana (PMRY) and also the Rural Employment Generation Programme (REGP). However, these both are working across similar lines to create employment among the youth.
Therefore, combining these two initiatives helps to combine urban and rural efforts and proceed in a more unified manner to establish micro-enterprises to increase the country’s number of jobs. The Scheme is initiated in the rural areas by KVIC/KVIB, and also in the urban and rural areas by the District Industries center and for monitoring purposes Ministry of Micro, Small and Medium Enterprises, Government of India is responsible.
During this program, the receiver or recipient only invests 5-10% cost of the project. Therefore, in comparison, the government provided the remaining cost as a subsidy, which is 15-35% of the project based on different criteria, and there is a term loan provided by the bank to the business person. Now I look forward to more details.
Objectives of Prime Minister’s Employment Generation Programme
The main objectives of PMEGP are:
1. To build up employment opportunities among rural and urban areas in the country by setting up new self-employment ventures/projects/micro-enterprises.
2. To provide a common platform to the widely dispersed traditional artisans/ rural and also urban unemployed youth and help them for self-employment circumstances to the possible extent at their respective places.
3. This step is also taken to provide continuous and feasible employment opportunities to a huge segment of traditional and prospective artisans and rural and urban unemployed youths in the country to prevent their migration from rural areas to cities for the sake of employment.
4. However, to benefit their income resources by increasing the number of wages of artisans and giving more contribution to increasing the growth rate of rural and urban employment.
Financial Aid provided
This Scheme provided financial aid to people as per their defined criteria. Although this Scheme covers micro, small, and medium-sized enterprises (MSMEs), some requirements still depend on the number of projects provided and the loan offered.
The borrower has to pay some contribution, but this is also defined categories wise like the General category pay 10%, and Special categories like SC/ST/OBC, minorities, women, ex-defense employees, physically challenged persons, and people from the North East region, hills, and border areas contribute only 5%.
Subsidy rates are also defining category wise like 15% for the general category in urban areas and 25% in rural areas. It is also defined from the government side for special category people like 25% for urban areas and 35% for rural areas.
How much Subsidy can you get through the PMEGP loan scheme?
|(of Total Project)
|(From Govt.) – Urban
|(From Govt.) – Rural
The remaining amount provided to the micro-unit entrepreneur is called a term loan provided by the banks as the project’s total cost, and also this term loan state as a PMEGP loan.
Eligibility Criteria for Beneficiaries For PMEGP new enterprises (Units)
- Individual above 18 years of age
- Under Prime Minister’s Employment Generation Programme PMEGP, assistance for setting up projects, there will be no income ceiling.
- The education qualification of persons should be at least VIII standard for setting up any project above Rs. 10 Lakh in the manufacturing sector and Rs. 5 lakh in the business /service sector.
- Only sanctioned projects under PMEGP have the assistance scheme.
- People who belong to BPL and have not availed the Subsidy under any scheme are also eligible for assistance under PMEGP.
- Institutions registered under Societies Registration Act,1860
- Production Co-operative Societies, and
- Charitable Trusts.
- Running Units and those have already availed Government Subsidy under any other schemes from the center, or state Government of India are not eligible.
Other eligibility conditions for PMEGP (New units)
1. Projects only with Capital Expenditure are eligible for financing under the Scheme. Costing of the projects greater than Rs.5 lakh (which do not require working capital) need clearance from the Regional Office or Controller of the Bank’s Branch, and the claims are required to be submitted with certified approval copy from the Regional Office or Controller.
2. Project costs must not include the cost of land. The cost of the constructed shed area and also long lease or rental Work-shed area/Workshop can be included in the cost of the project. Also, a long lease or rental work-shed/ workshop to be included in the project cost calculated for a maximum period of 3 years only.
3. PMEGP is applicable to all new viable Small Scale Industries, micro-projects, including Village Industries projects except all prohibited activities by local Government/Authorities, and also keeping in mind environmental or socio-economic factors.
4. Trading activities
- Sales outlets type activities may be permitted in NER, LWE-affected districts, and A & N Islands.
- Under PMEGP, different khadi products and also products purchased from khadi and village industry institutions certified by KVIC are allowed for selling across the country.
- Retail outlets backed by manufacturing (including processing) / service facilities could also be permitted (across the country).
- The maximum cost of the project for business/service activities as above [(a) and (b)] could also be Rs.10 lakh (at par with the utmost project cost for the service sector).
- Maximum 10% of the financial allocation during a year during a state could also be used for business/trading activities as above [(a), (b), and (c)].
Transport activities like purchase of Cab/Van/ Boat/Motor Boat/ Shikara etc, for tourism or the general public are allowed. A ceiling of 10% on the extent of projects financed under transport activities are going to be imposed altogether areas except for NER, hilly region, LWE-affected districts and A & N Islands, Goa, Puducherry, Daman & Diu, Dadra Nagar Haveli, J&K, Lakshadweep or other specific areas as could also be declared so by the govt.
- The Institutions/Production Co-operative Societies/ registered Trusts and SC/ ST/ OBC/ Women/ Physically Handicapped / Ex-Servicemen and Minority Institutions are eligible for Margin Money (Subsidy), but in the case of a general category, the Institutions/Production Co-operative Societies/Trusts which are not registered as special categories are eligible for Subsidy.
- One person per family is eligible for obtaining financial assistance for projects under PMEGP, and ‘family’ means self and spouse.
For up-gradation of existing PMEGP/MUDRA units:
- Margin Money claimed under PMEGP is adjusted as per criteria.
- Under PMEGP/MUDRA, the first loan is easily repaid in stipulated time.
- The unit is profit-making with good turnover and also having the potential for growth in turnover.
Which documents are necessary for PMEGP Loan
The following documents are required to apply for a loan:
- Aadhaar Card
- PAN Card
- Caste or community certificate, or any other relevant document from a competent authority, which shows that the applicant is the eligible loan
- A claim to the Subsidy to which they are eligible
- For the society or an institution, a certified copy of the bye-laws is also needed.
- Project Report and cost of the project
- Rural area certificate
- Education/ skill development training/ EDP certificate
- Authorization letter
Also some important points like:
- Applicants can include the cost of leasing or renting any work-shed or workshop on lease but not for more than 3 years.
- The cost of land cannot include in the project cost.
- 10% of the project cost should be the applicant’s own contribution to the general category and also for the weaker section, 5% of the project cost.
- PMEGP e-portal provides access to the applicants to apply for registration online by filling and submitting the application form online at https://www.kviconline.gov.in/pmegp.jsp
- PMEGP loan helpline number is 1800 3000 0034 and state-wise contact available on website https://www.kviconline.gov.in/pmegpeportal/pmegphomw/index.jsp
Below some important points like the percentage share of each party in granting funds to interest rate and time period.
PMEGP Loan Allocation
Money breakup has given under a PMEGP Loan
- When the application accepts, the bank provides 95% of the project cost (for weaker sections of society) or 90% (for general applicants).
- Out of this, 15-35% is the margin money or Subsidy, which is provided by the government. Therefore, the margin money is proportional to the actual capital expenditure taken by the applicant. However, the remaining margin money is proportional to the amount not taken will be returned to the Khadi and Village Industries Commission (KVIC).
- The bank provides the remaining funds (i.e., 90/95% issued less 15-35% subsidy) as a term loan.
Rate of Interest for PMEGP bank loan
The rate of interest on this loan is at a regular rate as applicable to the MSE sector.
However, after an initial moratorium (which does not exceed 6 months), the bank provides 7 years to the borrowers to pay back the loan.
Margin Money / Subsidy
The margin money is in a lock-in period of 3 years and saved in a separate account, which is later adjusted with PMEGP loan or released.
Working Capital Requirements
Working capital expenditure is equal to the cash credit limit at least once in the three years after the margin money is locked in. It is not less than 75% utilization of the sanctioned limit.
Sectors for PMEGP Loan
- Agro-based Food Processing
- Forest-based Products
- Hand Made Paper and Fibre
- Mineral-based Products
- Polymer and Chemical-based Products
- Rural Engineering and Bio-Tech
- Service and Textile
How to make a online application for PMEGP Loan?
- To start with PMEGP online, apply via the e-portal at
- You can also click on this link and complete the application form and save as a draft and take the printout and submit it to the nearest office of PMEGP.
|1st Step : Fill the information in the application form
|2nd Step : Save the application as a draft
|3rd Step : Save Take a printout of the applicable form
|4th Step : Submit the application form to the nearest office
|5th Step: Finish all formalities performed by the respective bank
Below mentioned are the fields to be filled correctly:
- Aadhaar Card number
- Full name as per the Aadhaar Card
- Name of sponsoring agency, like KVIC, KVIB, DIC, or COIR Board
- Select the state and district from where you belong or have valid documents
- Sponsoring office and Gender
- Date of birth along with age proof
- A social category that includes General, OBC, SC, ST and social category, such as ex-serviceman, physically challenged, hill border region or northeast region with certificate
- Enter qualification as per your knowledge
- Complete address with pin code, also provide your mobile number, email, and PAN number.
- Unit of location is important, whether it is rural or urban.
- Select the industry sectors being manufacturing, service, and trading
- EDP training underwent or not
- Project cost
- Most important of all is your selection of 1st Financing Bank with IFS code, branches, address, and district
- Alternate Financing Bank name is also required with its IFS code.
Frequently Asked Questions (FAQs) on Prime Minister’s Employment Generation Programme PMEGP
Q. Who can take a PMEGP loan?
Ans: These are following can apply for the PMEGP loan:
1. Individuals with age above 18 years.
2. He or She passed at least the 8th standard for a manufacturing or production sector project cost above Rs.10 lakh, and a business/service sector cost above Rs. 5 lakh.
3. Self Help Groups (even those falling under BPL provided that the SHG has not obtained benefits from another scheme)
4. Institutions registered under the Societies Registration Act, 1860
5. Production Co-operative Societies
6. Charitable Trusts
But, existing units like those drop beneath PMRY, REGP, or any other conspire by the state or central government, and units as of now profiting beneath a state or central government plot cannot profit off a PMEGP credit.
Q. Is there any age restriction for PMEGP loan?
Ans: In this Programme, i.e., The Prime Minister’s Employment Generation Programme PMEGP, it is mandatory that the applicant age must be at least 18 years. Also, in our country, it is illegal if a person below 18 years of age is found working. There is no upper age limit define, although banks may use their criteria to prescribe an upper age limit.
Q. What is the education criterion for applying for a PMEGP loan?
Ans: The applicant who wants to apply for this loan must have studied and passed class 8. And also if he/she wants to start a manufacturing unit of cost over Rs.10 lakh or a service unit cost above Rs.5 lakh by taking a Prime Minister’s Employment Generation Programme PMEGP loan. This is applicable for the cost of the manufacturing unit is less than Rs. 10 lakh or for service unit is less than Rs. 5 lakh.
Q. Can a person living in urban area get PMEGP loan?
Ans: Yes, this loan is available all over India for everyone, but some criteria are defined which they have to fulfill to complete mandatory requirements. Therefore, certain restrictions, on how much subsidy one can get. For example, the general category’s subsidy is 15% in urban areas, while it is 25% in rural. It is 25% in urban ranges and 35% in rustic for the weaker segments of society.
Q. Will the bank allow me the edge money?
Ans: Yes, the bank gives you the edge cash after the lock-in period, therefore you’ve got utilized your stores, as per the rules issued by the bank.
Q. Are there any rules on finance utilization under PMEGP Scheme?
Ans: The Prime Minister’s Employment Generation Programme PMEGP advance requires that the working capital use be break-even with to money credit constrain at slightest once within the 3 a long time after the edge cash is bolted in. Additionally, it ought to not be less than 75% usage of the authorized limit.
Q. What is the extended cost of PMEGP?
Ans: The extended fetched is the break-up of capital consumption and the working capital necessities for one cycle. It moreover incorporates the fetched of renting or leasing any work shed or workshop, given the full of such lease/rent isn’t for more than 3 year long time. Therefore, 10% of the venture taken a toll ought to include the applicant’s possess commitment for the common category, and 5% of the venture taken a toll ought to be one’s claim commitment for the special category. The taken toll of land cannot be included within the project cost.
Q. I don’t have any working capital costs. Will I be able to get a PMEGP loan?
Ans: Yes, eligible. However, you would like it an endorsement of the break-up without working capital from the bank branch’s territorial office or controller.
Q. What is Age constrain for PMEGP Loan?
Ans: Any grown-up recipient over 18 a long time is qualified for financing beneath PMEGP.
Q. What is the criteria for the PMEGP project?
Ans: It ought to fulfill the criteria of the provincial zone (for Provincial Zone venture),therefore per capita venture, possess commitment, negative list, and the unit ought to be a modern one.
Q. IS EDP training mandatory for PMEGP Loan?
Ans: To apply for MM Claim through the PMEGP portal, EDP training of 10 working days for Extend fetched More than 5.00 lakhs and 6 Working days training for up to venture Taken a toll 5.00 lakhs to the recipient is compulsory.
Q. Is security needed for PMEGP Loan?
Ans: RBI states that the venture costing up to Rs.10.00 lakhs beneath PMEGP advances is free from collateral security. The CGTSME given collateral ensures the venture past Rs.5.00 lakhs and up to Rs.25.00 lakhs beneath the PMEGP scheme.
Q. Whether a business visionary can yield more at that point one venture?
Q. What is the definition of family?
Ans: Spouse only.
Q. Whether the Unit can be set up in the urban area.
Ans: Yes, by DIC.
Q. Whether the existing unit can profit reserves beneath PMEGP?
Ans: No, as it was an unused unit.
Q. How much claim to be deposited?
|Categories of recipients
(of venture cost)
|Special (counting SC / ST / OBC /Minorities/Women, Ex-servicemen, Physically incapacitated, NER, Slope and Border ranges, etc.