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Collateral free loans available for MSMEs: Minister

A slew of measures recently taken by the Ministry for improved implementation of its flagship scheme are expected to fight economic slowdown by faster creation of enterprises and jobs in the micro sector, the Minister of State (Independent Charge) for Micro, Small & Medium Enterprises, K.H. Muniyappa Wednesday said, also making it clear that collateral free loans are available for MSMEs under PMEGP and CGTMSE.

"Collateral free loans are available for PMEGP projects costing upto Rs 25 lakh, as follows: (a) vide RBI circular dated 6 May 2010, Banks have been mandated not to accept collateral security in the case of loans upto Rs 10 lakh extended to units in the micro and small enterprises sector and (b) under the Credit Guarantee Fund Trust Scheme for Micro & Small Enterprises (CGTMSE)," said Muniyappa, at a press conference held in New Delhi on Wednesday.

Speaking on the recent initiatives for enhancing the effectiveness of implementation of Prime Minister's Employment Generation Programme (PMEGP), he said, "The scheme is designed to create productive employment through entrepreneurship (especially in the manufacturing sector) and arrest migration of workers and artisans to urban centres and other areas in search of employment."

On the issue of plan allocation, the Minister said, "For the country, as a whole, the outlay for 12th Five Year Plan under PMEGP has been kept at Rs 8060 crore which is 70 percent higher than the allocation of XI Plan."

"The scheme will create over 5 lakh enterprises and will generate employment for about 40 lakh persons," he added. PMEGP is the major credit linked subsidy programme being implemented by the Ministry.

On the major steps taken by the Ministry the Minister said "towards speedy and effective implementation of the scheme through expeditious monitoring at the district level. The Ministry has already issued instructions to KVIC that the units assisted under the scheme are actually set up within a time frame of 100 days."

Highlighting the PMEGP as a major credit linked subsidy programme the Minister said that the Government has released Rs 5251.51 crore under the scheme since 2008-09 and more than 2.22 lakh projects have already been assisted, providing employment to an estimated 20.42 lakh persons.

The Government has been enhancing the allocation for PMEGP every year and the allocation for the current year for 2013-14 is Rs 1418.28 crore for existing 1.03 lakh projects creating employment for over 8 lakh persons, the minister added.

He further said, "The Ministry of MSME on 30 August 2013 constituted an Advisory Committee for each district of the country for monitoring the progress of PMEGP with active involvement of Members of Parliament from the district."

The Minister highlighted that the Ministry of MSME has approved constitution of a District Level Advisory Committee comprising around 30 members which would provide overall guidance and suggestions for the implementation of the programme.

The committee would liaise and coordinate with KVIC, State Government and other agencies including Banks for effective mobilization of young entrepreneurs under PMEGP. It would also ensure that the scheme is implemented in accordance with its guidelines.

The Committee would be chaired by the Member of Parliament (Lok Sabha) elected from the District having the largest part of the district under his/ her Parliamentary constituency. Other Members of Parliament of Lok Sabha having part constituency in the district would be co-chairperson and Member of Parliament of Rajya Sabha will be a member.

The other members would include Members of State Legislative Assembly and Legislative Council, Chairperson of Zilla Panchayat, representatives of SC/ST, OBC, minority and women and one professional from social work/ social science, representatives of bank and financial institutions. District Magistrate/ Collector will be its member-convener. The committee will meet once in every quarter. KVIC which is the nodal agency for the scheme at the national level has been asked to take necessary action.

The Ministry has also directed KVIC and the implementing agencies to ensure that at least 100 projects per district are assisted under the scheme this year. The allocation for the three disaster affected districts of Uttarakhand has also been increased substantially which would help re-build the entrepreneurial base of the region.

Present at the Conference were Madhav Lal, Secretary, Ministry of MSME, S.N Tripathi Joint Secretary, and Udai Pratap Singh, CEO, KVIC.