Govt to extend support to 80,000 new micro enterprises under PMEGP

The decision was taken at a meeting chaired by minister of MSME Nitin Gadkari and finance minister Nirmala Sitharaman with senior management of banks.

PMEGP is a credit-linked subsidy scheme which promotes self-employment through setting up of micro enterprises, where subsidy up to 35 per cent is provided by the government through ministry of MSME for loans up to Rs25 lakh in manufacturing and Rs10 lakh in service sector.

Both the union ministers commended the work done by banks in supporting the setting up of a 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 15 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 15 March.

Data analysis of applications rejected by banks revealed that 11 per cent of the proposals are rejected because the targets given to local banks under PMEGP are not 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 per cent 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 Rs50,000 crore under this scheme, which is a jump of about 67 per cent over the last year. Banks said there was 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 MSME minister emphasised on 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 31 December 2020.

The initiatives taken for the MSME sector is expected to go a long way in providing support to the sector, thereby increasing employment opportunities, an MSME ministry release stated.