PMEGP: Measures to Encourage Self-Employment and Micro-Entrepreneurship

The Prime Minister’s Employment Generation Programme (PMEGP) is a Central Sector Scheme aimed at promoting self-employment through the establishment of new micro-enterprises. The scheme primarily supports projects with small investment requirements, which are financed through bank loans. 

During the period from FY 2020–21 to FY 2024–25, approximately 63% of assisted units in the manufacturing sector and about 93% in the service sector had project costs of up to ₹10 lakh, underscoring PMEGP’s emphasis on small-scale enterprises.

Support for Small Project Proposals

To encourage entrepreneurs with limited capital, priority is accorded to applications proposing project costs below ₹10 lakh. This approach ensures that smaller ventures receive timely assistance under the scheme.

Collateral-Free Credit for Small Loans

In accordance with the Reserve Bank of India (RBI) guidelines, banks are not required to insist on collateral security for loans up to ₹10 lakh. The Ministry has reiterated strict adherence to this provision to all major banks to facilitate easier access to institutional credit.

Relaxation in Educational Qualification Requirements

There is no requirement for any educational qualification for setting up manufacturing projects costing up to ₹10 lakh and service sector projects costing up to ₹5 lakh. This provision widens the scheme’s reach and enables greater participation from aspiring entrepreneurs.

CHAMPIONS Portal for MSME Support

The Ministry of MSME operates the CHAMPIONS (Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength) portal, which functions as an integrated platform for grievance redressal related to MSME schemes, including PMEGP. 

The portal also provides handholding support, advisory services, and facilitates coordination between MSMEs and key stakeholders such as the Central and State Governments, banks, and other agencies.

Interest Rate Framework and RBI Guidelines

Interest rates on PMEGP loans are determined by individual banks, as interest rates on bank advances have been deregulated by the RBI. These rates are linked to banks’ respective credit appraisal and underwriting policies, within the regulatory framework prescribed by the RBI. 

At the same time, RBI has issued directions to ensure transparency, fairness, and adequate disclosure of loan terms, enabling beneficiaries to make informed decisions and preventing arbitrary recovery of interest. Banks have also been advised to accord priority to PMEGP projects while sanctioning loans.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.