PMEGP Loans Approved By Banks Based On Viability, Not Government Discretion: MSME Ministry

New Delhi, Jan 31 (KNN) The Prime Minister’s Employment Generation Programme (PMEGP) is a demand-driven scheme, with final approval, sanction and release of loans undertaken by the concerned financing banks based on project viability and their independent credit appraisal.

This information was provided by Minister of State for MSMEs Shobha Karandlaje, in a written reply to Lok Sabha.

The Ministry of Micro, Small and Medium Enterprises (MSME) said that banks assess proposals in line with their internal policies, while coordination and monitoring are ensured through regular Bankers’ Committee meetings at block, district and state levels, as mandated under the RBI’s Lead Bank Scheme. 

In addition, State Level Monitoring Committees (SLMCs) and District Level Monitoring Committees (DLMCs) hold periodic reviews to assess the performance and implementation of PMEGP across states and districts.

To improve transparency and accessibility, details of nodal officers responsible for PMEGP implementation have been published on the scheme’s online dashboard and are available on the PMEGP portal, the Ministry said.

The government has also put in place a mechanism for physical verification of micro enterprises set up under PMEGP, including geo-tagging and verification of operational status, to ensure timely adjustment of margin money subsidy into beneficiaries’ loan accounts. 

Further, a second loan component has been introduced to support successful enterprises, providing financial assistance of up to Rs 1 crore with a subsidy of 15 percent, and 20 percent for enterprises in the North Eastern Region and hill areas, for upgradation of well-performing manufacturing units assisted earlier under PMEGP, REGP or MUDRA.

To enhance beneficiary awareness and financial transparency, an Interest/EMI Calculator has been integrated into the PMEGP portal. The tool allows applicants to estimate monthly EMIs, total interest payable and overall repayment obligations by entering loan amount, interest rate and tenure details.

The Ministry noted that while the Reserve Bank of India has deregulated interest rates on bank advances, PMEGP loan interest rates are determined by individual banks within the RBI’s regulatory framework. 

RBI guidelines require regulated entities to ensure transparency, fairness and adequate disclosure of loan terms, enabling beneficiaries to make informed borrowing decisions and preventing arbitrary interest recovery.

(KNN Bureau)