Tag: business loan

Here’s how you can get PMEGP govt loan to expand your business, BFSI News, ET BFSI

Banking & Finance

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The PMEGP (Prime Ministers Employment Generation Programme) is a financial scheme that provides financial support to the MSMEs to expand, or stabilize their existing business. This loan is also given to individuals to start a new business.

Financial support is very helpful while starting your new business or managing your existing business. It is also required during the growth phase of your business.

For MSMEs and new businesses, it can get very difficult to get a loan. To counter this problem, the Government of India started the PMEGP scheme in 2008.

PMEGP Scheme’s Loan Structure
PMEGP loan has a limit that can be sanctioned for different businesses. For example, businesses in the manufacturing sector can have a maximum project amount of Rs 25 lakhs. However, the limit is Rs 10 lakh for businesses in the service sector. The business makes a 5% to 10 % contribution of the project amount, and the bank provides the rest as a term loan.

However, in reality, you only get 60% to 75% from the bank, and the rest of 15% to 35% you will receive in the form of margin money through the PMEGP scheme. The margin money, in simple words, is a subsidy that the government provides.

How to get a loan under the PMEGP scheme
The PMEGP scheme is managed by the Khadi and Village Industries Commission (KVIC).

To get the benefits of this scheme, you have to fill up the application, where you have to provide necessary details regarding the nature of the business, the detail of the project, etc. Also, you have to submit the necessary documents.

And to get your loan successfully sanctioned, your application for your project or business must satisfy any one of the four objectives of the PMEGP scheme.

The four objectives for the PMEGP scheme are:
1. To create employment opportunities in both the rural and the urban areas by establishing new businesses, startups, self-employment projects, or through the growth of established businesses.

2. To create self-employment opportunities among the youth in rural and urban India.It can also be to promote and support the traditional craftsmanship and artisans in India.

3. To create stable employment for the youth in rural India so they don’t migrate to urban cities in search of employability.

4. To increase the income of the traditional artisans of rural and urban India by promoting and providing self-employment to them.

Documents Required to apply for PMEGP Loan
* Aadhar card
* PAN card
* Project report having details of project
* Caste certificate
or
any other Special category certificate (if needed)
* Rural Area certificate
* Letter from the authority
* Educational Qualification certificate
or
Skill Development Training certificate or EDP certificate.
* Collateral of PMEGP scheme loan

As per the RBI guidelines, any project costing up to Rs 10 lakh does not require any collateral to get a loan. But if the project cost is more than Rs 10 lakh, you may need to provide some collateral according to the needs of the lender.

Interest Rate for PMEGP Loan
The interest rate for a PMEGP loan is 11% to 12% p.a.

Eligibility for the PMEGP Scheme
* An individual should be above 18 years of age.

* The individual must have passed the 8th Standard in school for the manufacturing sector project that costs above Rs 10 lakh

Service sector project that costs above Rs 5 lakh
* Self-help groups are eligible.
* Charitable trusts
* Registered Societies
* Co-operative societies that are involved in the business of production

Businesses that are under the PMEGP Scheme are:
* Agriculture & Food Processing
* Forest-Based Products
* Hand Made Paper and Fibre
* Mineral Products
* Polymer and Chemical Products
* Rural Engineering and Bio-Tech
* Service and Textile

How businesses can apply for a PMEGP loan online
* Visit the website of the Khadi and Village Industries Commission (KVIC) — kviconline.gov.in

* Next, click on the Online Application form for Individual or Online Application form for Non-Individual (whichever is suitable for you).

* Next, fill-up the form by entering the necessary details.

* Now click on ‘save application data’

* Then upload the documents and get ready for the final submission.

* After the final submission, you will get an application ID and password, it will be sent to your registered mobile number.



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HDFC Bank launches festive offers, partners with over 10,000 merchants, BFSI News, ET BFSI

Banking & Finance

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Private lender HDFC Bank on Tuesday said that it has partnered with over 10,000 merchants for its Festive Treats 3.0 campaign, a near 10 fold increase from 2020. Customers can choose from 10,000 offers on cards, loans and easy EMIs.

“As India unlocks, we are also trying to spread a little cheer in the lives of people and help the overall national economic good,” said Arvind Kapil, Group Head – Retail Assets, HDFC Bank. “This is reflected in our range of offers spanning Personal loans, Car loans, two-wheeler loans as well as the Business Loan & working capital loans for really small businesses.”

Some of the key national partners include Apple, Amazon, Shoppers Stop, LG, Samsung, Sony, Titan, Central, Ajio, Reliance Digital, Reliance Trends, Lifestyle among others.

The bank will use its ATM, branch network, partnerships with stores & websites and digital media campaigns to reach its customers.

“Our range of offers on credit cards is not just about coming back with a bang. It is about spurring India’s consumption story,” said Parag Rao, Group Head – Payments, Consumer Finance, Digital Banking, and IT, HDFC Bank. “We are encouraged to do this since about one-third of spends on credit, debit and prepaid cards in India happens on an HDFC Bank card.”

The bank said it has a cash back offer of Rs Rs 6,000 on iPhone 13. It is also offering upto 22.5% CashBack & No Cost EMI on electronics & consumer goods like washing machines and refrigerators.

The bank will offer personal loans starting at 10.25% with instant disbursal in customers account. Its car loans will start at 7.50% with Zero Foreclosure charges.

It is also giving options of funding of up to 100% on two-wheeler loans and 90% funding on tractor loans with zero processing fee.

“This has been one of the most challenging periods for people due to the pandemic. Festive Treats 3.0 is not just about spending for oneself but also about helping others, Festive purchases will benefit many others employed in small businesses and create a chain of recovery across the spectrum,” said Ravi Santhanam, CMO, Head -Corporate Communications, Liability Products & Managed Programs, HDFC Bank.



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‘Magma, on its own, was finding it difficult to compete with the big boys’

Banking & Finance

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“This is a very significant fund-raise, our current networth is about ₹2,560 crore and this is about ₹3,450 crore. It is more than 150 per cent of our current net worth,” said Sanjay Chamria, Vice President and Managing Director, Magma Fincorp, on the proposed deal with Adar Poonawalla-controlled Rising Sun Holdings.

In an interview with BusinessLine, Chamria said it will benefit both Magma and Poonawalla Finance and regulatory approvals are expected soon. Edited excerpts:

What are the plans once the deal is finalised?

From my understanding, in addition to the product range that Poonawalla Finance has, which is professional loan and business loan, Magma has seven products and that is what they see as an advantage. We have a secured product range — used assets, tractors, LAP, affordable housing, MSME. Adar Poonawallas’s idea is that India is a vast and untapped market for tapping micro and small enterprises, which are constantly deprived of loans from the banking sector. Magma being a 32-year old organisation with 300 branches provides a readymade platform.

Also read: Magma Fincorp hits 52-week high after Poonawalla backed firm picks 60% stake

What is the benefit to Magma Fincorp?

Magma, on its own, was finding it difficult to compete with the big boys due to their capital base, huge corporate backing, cost of funds being higher, and rating.

Poonawalla Group has today become synonymous with the vaccine and such a large group with so much of cash reserve will provide a lot of strength to Magma in terms of credit rating, dealing with the banking system and lower cost of funds. That way one can also service the customers better by lowering the rates at which you lend and get better quality customers and asset quality also improves. It becomes a virtuous cycle rather than a vicious cycle.

When is the transaction likely to be completed?

The shareholder meeting is on March 9 and we are simultaneously applying to the regulators for approval. We are a listed company and are regulated by the Reserve Bank of India, National Housing Bank and Insurance Regulatory and Development Authority of India. This deal is at the listed company level and that is the holding company for the housing finance company and also the dominant promoter in the insurance company. There is also CCI approval we have to get. All these regulatory approvals will move on a parallel manner and we should be able to consummate it sooner than later.

Has liquidity been a problem for Magma post the pandemic?

Liquidity has not been a problem, it has been available in abundance. Even in our quarterly results, we have said over the last three quarters we are sitting on a liquidity of more than ₹2,000 crore but our cost of funds is 9.5 per cent, whereas Poonawalla Finance’s cost of funds is 7.2 per cent. The differential is 2 per cent plus. In finance, money is the raw material. So, if that is higher, that can make an enormous difference. The rating is AA+ given the small corporate backing of Poonawalla Finance and our rating is AA-. The credit rating will improve.

Also read: ₹3,456-crore deal: Adar Poonawalla-backed firm to pick 60% stake in Magma Fincorp

What happens post consolidation of the two businesses? Will the headquarters move from Kolkata?

Poonawalla Finance will surrender the NBFC license and will get consolidated into Magma and Magma will be renamed Poonawalla Finance. It will get a new brand and get the backing of the strong corporate group. Adar will become the Chairman of the company and I will continue as the vice chairman. My role will be to ensure the process is smoothed and the integration becomes successful. Shifting of head office will be looked at later, nothing will be done in a disruptive manner. Magma’s corporate office is already in Mumbai.

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