Step by Step Procedure to avail PMEGP Loan and Subsidy

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PMEGP (Pradhan Mantri Employment Guarantee Program) is a nodal scheme of the Government of India launched in 2008. The nodal implementing agency of this scheme is the Khadi and Village Industries Commission (KVIC). The PMEGP scheme is implemented at the state level by State Khadi and Village Industries Directorate and State Khadi and Village Industries Board (KVIBs) and at the district level by District Industries Centre (DICs). A loan facility under the PMEGP scheme is provided to generate employment opportunities in rural as well as urban areas through new self-employment ventures/enterprises/projects.

Getting loan under PMEGP scheme:-

  1. Draft a business idea, whether in the manufacturing or service sector for which the loan facility is required.
  2. Identify the location where the business idea is to be executed.
  3. Draft a business plan related to the relevant business idea which needs to be submitted with the application.
  4. The application can be submitted through www.kviconline.gov.in along with the business plan.
  5. The District Level Task Force Committee will conduct an interview to evaluate the submitted project, which, if approved, shall be forwarded to the bank for availing loan facility.
  6. Relevant documents shall be submitted to the bank to take the loan application process ahead and deposit the beneficiary’s contribution.
  7. Mandatory EDP training for 10 days is to be attended.
  8. Subsidy or margin money on producing the training certificate at the bank can be collected. For 3 years, the subsidy shall be kept in a TDR (Term Deposit Receipt ).
  9. The subsidy is credited to the account after 3 years of the first disbursement, and only after ensuring that the unit is still working; no interest on this amount needs to be paid.

The interest rates for the loan facility are as follows:-

@15% for urban

@25% for rural

@25% special

@35% rural (including NER, hill and border areas, ex-servicemen, SC/ST/OBC/Minorities/Women, physically handicapped)

Eligibility criteria for PMEGP:-

Beneficiary Criteria:-

  • Individuals above 18 years or above of age
  • The beneficiary of the loan should possess at least VIIIth standard passed qualification.
  • Self Help Groups (SHGs), including those under the BPL category who have not been provided with loans under another facility, shall be eligible under the PMEGP for assistance.
  • Institutions under the Societies Registration Act of 1860
  • Charitable Trusts and Production Cooperative Societies

Project Criteria:-

  • Projects costing Rs.10 lakh and above in the manufacturing sector and Rs.5 lakh and above in the services sector
  • Under the scheme, only new projects sanctioned shall be eligible for the loan facility.

Unit Criteria:-

  • Existing units under  REGP, PMRY or any other scheme of the State Government or the Government of India and the units that have availed any subsidy under any of the government of India and state government shall not be eligible for subsidy under PMEGP.

Rate slabs of project costs

Location of the EnterpriseSpecial CategoryGeneral Category
Urban25%15%
Rural35%25%

Beneficiary’s Contribution

General category10%
Special Category5%
  • The maximum cost of the project/unit admissible under the manufacturing sector is Rs.25 lakh.
  • The maximum cost of the project/ unit admissible under the service sector is Rs.10 lakh.
  •  The balance amount of the total project costs will be provided by banks as a term loan.

The bank sanctions 90% of the project cost in the general category of beneficiary/institution, and in case of the special category, 95% of the project cost is sanctioned.

Capital expenditure is financed by the bank in the form of a Term Loan and Working Capital in the form of cash credit.

What is not permitted under PMEGP for setting up micro-enterprises or projects?

  • Any business or industry connected with meat (slaughtered), i.e. processing or canning and/or items made of it as food production or manufacturing or sale of intoxicating items such as beedi/paan/cigar/cigarette.
  • Any hotel or eatery or outlet serving liquor, producing or tapping toddy or processing tobacco as raw materials for sale.
  • Any industry or business connected with cash crops like coffee, tea, rubber etc., sericulture (cocoon rearing), floriculture, horticulture etc. Value addition under these shall be allowed under PMEGP.
  • Any industry or business connected with animal husbandry like poultry, pisciculture, piggery etc.
  • Manufacturing of polythene bags (less than 20 microns thick) or containers made of recycled plastic for carrying, storing, dispensing or packaging foodstuff and any other item that is detrimental to the environment.

FAQs

  1. The maximum amount allowed under the PMEGP scheme can be?

For manufacturing projects, the maximum cost allowed is Rs. 25 lakhs, and for service units, the maximum cost allowed is Rs. 10 lakhs.

  1. Does the project cost include the cost of land?

No. The cost of land does not include project cost.

  1. How much of the government subsidy is allowed under PMEGP?
Beneficiary categories under PMEGP Margin Money rateProject Cost subsidy
AreaUrban areasRural areas
General category15%25%
Special category25%35%
  1. The project cost comprises all components?

One cycle of working capital at capital expenditure loan- in the case of general category, 10% of the project cost as own contribution and weaker sections, is 5%.

  1. Who is the beneficiary of this scheme?

Institutions, Individual Entrepreneurs, SHGs, Co-operative Societies, Trusts

  1. Which financial agencies finance the PMEGP scheme?

Co-operative Banks, Regional Rural Banks (RRB), 27 Public Sector Banks, and State Task Force Committee approved Private Scheduled Commercial Banks.

  1. How can the Cash Credit Limit/capital expenditure loan be utilized?

Working Capital should be 100% limit of Cash Credit at least once in less than 3 years of lock-in period of money margin and on an average, at least 75% of utilization of sanction limit.

  1. Where does the beneficiary have to submit his/her Application/Project?

Application/Project can be submitted online on the KVIC website.

  1. What is a rural area?

An area categorized as a Village according to the revenue record of the State.

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