80,000 Micro Enterprises to be Assisted in Current Financial year under PMEGP

In the meeting which chaired by Shri Nitin Gadkari, Minister of MSME and Finance Minister Smt. Nirmala Sitaraman to be Assisted 80,000 Micro Enterprises in Current Financial year under Prime Minister’s Employment Generation Programme (PMEGP). PMEGP is a credit linked subsidy scheme which promotes self-employment through setting up of micro enterprises, where subsidy up to 35 percent is provided by the Government through Ministry of MSME. More details of this announcement read the below.

Ministry of Micro,Small & Medium Enterprises

80,000 Micro Enterprises to be Assisted in Current Financial year under PMEGP

Meeting held to review MSME key Schemes Generating Employment

27 FEB 2020

In a meeting held yesterday chaired by Shri Nitin Gadkari, Minister of MSME, and Smt. Nirmala Sitharaman, Finance Minister with senior management of all Banks, some of the key schemes of Ministry of MSME which generate large number of jobs with low capital investment were reviewed. The focus of the meeting was on the Prime Minister’s Employment Generation Programme (PMEGP), a flagship scheme of the Ministry of MSME, and Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). In addition, the issue of restructuring of stressed loans to MSMEs was also discussed to find a way forward to support MSMEs.

PMEGP is a credit linked subsidy scheme which promotes self-employment through setting up of micro enterprises, where subsidy up to 35 percent is provided by the Government through Ministry of MSME for loans up to Rs. 25 lakhs in manufacturing and Rs 10 lakhs in service sector.

Both the Union Ministers commended the work done by the Banks in supporting setting up large number of enterprises under PMEGP over the past years, which has particularly seen a two-fold increase in last Financial Year when more than 73,000 micro enterprises were assisted.

To give further boost to the scheme, the target in the current year has been increased to support the establishments of 80,000 units. In the current year, more than 46,000 units have already been provided with loans by the various Banks and additionally 22,000 loan applications have also been sanctioned and are awaiting disbursement. Banks were requested to release the loans in such approved cases immediately. Besides, the Banks were requested to take up about 1.18 lakh pending loan applications latest by 15th March, with special emphasis on North Eastern Region (NER). CMDs of the Banks, while supporting the scheme, confirmed that they will clear all pending cases by 15th March.

Data analysis of applications rejected by Banks revealed that 11% of the proposals are rejected because the targets given to local banks under PMEGP are met. To address this issue, Banks were requested to increase lending under the scheme and revise their policy of fixing minimum targets so that all eligible applications can be considered for sanction. Similarly, it was found that 11% of the applications are also rejected since the applications received by the banks were outside their service jurisdiction. Accordingly, Banks were also asked to devise a mechanism whereby such application can be automatically transferred to other appropriate branches in the area. A simple procedural change will now ensure that these applications will get considered on merit instead of being rejected summarily. The endeavour of the government is to grant a fair opportunity to every aspiring entrepreneur.

Discussions were also held with Banks on increasing the reach of Credit Guarantee scheme. Government has set a target of increasing credit guarantee to Rs. 50,000 crores under this scheme, which is a jump of about 67% over the last year. The Banks brought out that there is a huge demand under this scheme and they are confident of achieving this target.

One of the major challenges faced by MSMEs is in restructuring stressed loans due to sector related problems or issues with the large industries to which they supply. Finance Minister and Minister of MSME emphasised upon the need for providing support to the MSMEs by suitably restructuring the stressed loans at an early stage. All CMDs agreed to support MSMEs in restructuring their stressed loans. Further they confirmed that in accordance with the Budget announcement, the cut-off date for restructuring of loans to MSMEs has been already extended up to 31st December 2020.

The meeting concluded with the optimism that these initiatives taken for the MSME sector will go a long way in providing support to the sector, thereby increasing employment opportunities. The meeting with Bankers clearly indicates the resolve and efforts of the Government in supporting the MSME sector which is the backbone of the economy.

Source: PIB

*****