NEW DELHI: While banks are witnessing fraudulent transactions in billions due to loan fraud, they turn a blind eye to common people seeking loans under a government scheme meant for employment generation.
According to the Ministry of Medium, Small and Micro Enterprises (MSME), about 87 per cent of loan applications under the Prime Minister Employment Generation Programme (PMEGP) have been turned down by banks and other authorities during 2017-18.
About 4 lakh people applied for loans from different banks to avail the benefits under the PMEGP in 2017-18, but only 51,319 people, or 12.5 per cent, succeeded in getting loans, according to the ministry
Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small & Medium Enterprises (FISME), said genuine applicants were not getting loans as there was a lack of political will.
“The kind of money that has come under the recent case of alleged fraud can cater to the loan demands of 2.40 lakh enterprises because the average loan size is less than Rs 5 lakh under the PMEGP. Banks can give loans to big corporate houses, but when it comes to small or micro industries their response is very poor,” he added.
Why the PMEGP has not been successful
“Banks often don’t get complete applications. At times, projects for which loans are sought are not viable. The profile of bank accounts are also looked into before considering the grant of a loan,” said an official
Government sources said considering the need for more employment generation through the PMEGP scheme, it has got more allocation in this year’s budget.
A senior official of the MSME Ministry said in the 2017-18 budget, Rs 1,024 crore was allocated for the scheme while in the current budget the amount had been increased to Rs 1,800 crore. The official added that the government has a target of five lakh jobs through 75,000 enterprises.
Under the PMEGP scheme, the maximum cost of the project or unit admissible in manufacturing sector is Rs 25 lakh and in business or service sector it is Rs 10 lakh. General category people can get a subsidy of 15 per cent in urban areas and 25 per cent in rural areas.