Banks need to speed up MSME loans under PMEGP: Govt

Minister of MSME, Dinsha J. Patel addressing a National Workshop on PMEGP in New Delhi on 4th August.

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Saurabh Gupta | 05 Aug, 2010
Minister of State for Micro, Small and Medium Enterprises (MSME) urged banks to speed up loans disbursement to MSMEs under the Prime Minister's Employment Generation Programme (PMEGP) to meet the target of 59,714 projects in current fiscal.

Speaking at the National Workshop on PMEGP, held in New Delhi on Wednesday Minister of State for MSME, Dinsha Patel said, "I request all the CMDs of banks to issue policy circulars to the financing branches to ensure fulfillment of the targets allocated".

The workshop was held to review the critical areas of the flagship scheme of KVIC and improve its implementation.

The minister informed that the target fixed for the current year i.e. 2010-11 is 59,714 projects with Margin Money assistance of Rs. 836.00 crore to create employment opportunities to 5.97 lakh persons.

He, however, said so far the disbursements only amount to 10 percent of the target for this financial year. The need of the hour is for the Khadi and Village Industries Commission (KVIC) to reach every village, he said.

Under the scheme, out of the total loans sanctioned by banks, 15 percent is meant for scheduled castes, while 7.5 percent would be for scheduled tribes, 27 percent for other backward classes, 5 percent for minorities and 30 percent for women.

The minister said that During the last two years about one lakh projects have been sanctioned by creating employment opportunities to about 10 lakh persons in the country.

He further said that scheme would provide continuous and sustainable employment opportunities in the country, through this powerful tool for industrialization.

During the year 2009-10, against the Margin Money target of Rs. 559.70 crore, the utilization of M.M. is Rs. 742.76 crore, which is 133% achievement over the said target.

Through the continuous persuasion at various levels by the Ministry of MSME, Reserve Bank of India has issued 'Notification' for collateral free loans upto Rs. 10.00 lakh, which was earlier upto Rs. 5.00 lakh only.

"Hence, any beneficiary who wants to set up PMEGP project upto Rs. 10.00 lakh, need not provide collateral security to the bank for the loan," Patel said.

"Further, loans above Rs. 10.00 lakh are also eligible to be covered under 'Credit Guarantee Scheme', which provides insurance for the loans to the bank and encourages the banker to provide loan without any risk and hesitation."

The Minister appealed to all the bankers to implement this 'Credit Guarantee Scheme' with letter and spirit by giving wide publicity for the benefit of the beneficiaries under the scheme.

While speaking on the same, the Secretary (MSME), Dinesh Rai also said that it is a very efficient tool for creating a strong entrepreneurial base in the country.

"During the last two years, Khadi and Village Industries Commission (KVIC) along with other implementing agencies of the programme i.e. State Khadi and Village Industries Boards (KVIBs) and District Industries Centres (DICs) has been able to provide assistance for setting up about 65000 micro enterprises."

"Thereby providing employment opportunities to around 6.5 lakh persons in the country. Enhanced disbursal of Credit during 2009-10 as compared to the previous year is indicative of growing popularity and involvement of agencies and banks in the programme," Rai added.