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RBI Notification Circulars Master Circulars Master Circular - RPCD. No. PLNFS.BC. 25/09.04.01/2002-2003, Dt. 14/10/2002

Master Circular - RPCD. No. PLNFS.BC. 25/09.04.01/2002-2003, Dt. 14/10/2002

Dear Sir,

Priority Sector Lending

Prime Minister’s Rozgar Yojana (PMRY)

Reserve Bank of India has, periodically issued instructions/directives to banks with regard to operationalisation of the PRIME MINISTER’S ROZGAR YOJANA scheme. To enable the banks to have current instructions at one place, a Master Circular incorporating all the existing guidelines/instructions/directives on the scheme has been prepared and is appended. We advise that this Master Circular consolidates all the previous instructions issued by RBI upto 31st December, 2001, which are listed in the Appendix to this circular.

Please acknowledge receipt.

Yours faithfully,
(A. V. Sardesai)
Chief General Manager-in-Charge

Master Circular

PRIME MINISTER’S ROZGAR YOJANA (PMRY)

Contents

Section-I - Guidelines on Prime Minister’s Rozgar Yojana (PMRY) (as amended from time to time).

Section-II - PMRY-Implementing Agencies and Operational Guidelines

Section-III - PMRY-Target Allocation & Recovery Requirements

Section-IV

Annexure I

Annexure II

Annexure III

Annexure IV

Annexure V

Annexure VI

Annexure VII

Annexure VIII

Annexure IX

Annexure X

Annexure XI

Annexure XII

Annexure XIII

Annexure XIV

Appendix

Master Circular

PRIORITY SECTOR LENDINGS - SPECIAL PROGRAMMES

Section-I

Guidelines on Prime Minister's Rozgar Yojana (PMRY)

1. Objective

The Prime Minister's, Rozgar Yojana (PMRY) has been designed to provide employment to educated unemployed youth by setting up of micro enterprises by the educated unemployed poor. It relates to the setting up of the self-employment ventures for industries, services and business.

2. Coverage

The scheme covers whole of the country.

3. Target Group

The scheme covers all educated unemployed youth with a minimum qualification of VIIIth Standard (passed). Preference will be given to women, ITI passed and persons who have undergone the Government sponsored technical course for a minimum duration of 6 months.

4. Eligibility Norms

i. Age

All educated unemployed youth between the age of 18 and 35 years on the date of receipt of application by the concerned DIC will be eligible for loan under the scheme in general with a 10 years relaxation for SC/ST/Ex-servicemen/physically handicapped and women i.e. upto the age of 45.

ii. Education

Educated/unemployed youth with a minimum qualification of VIIIth Standard (passed). Preference is to be given to persons who have received training in any trade in Government recognised/approved institutions (ITI, etc.) for a minimum duration of six months. Applicants with higher qualifications or who are still pursuing further course of studies after their matriculation are also eligible for assistance.

iii. Annual family income

a. Income upto Rs. 40,000/- per annum of family and upto Rs.40,000/- per annum of parents of beneficiary on the date of application should be taken into account. Family for this purpose would mean the beneficiary and spouse. Family income would include income from all sources whether wages, salary, pension, agriculture, business, rent, etc.

b. As per this definition, family income should be upto Rs. 40,000/- per annum of the beneficiary; the beneficiary and spouse together, if married and upto Rs. 40,000/- per annum of parents of the beneficiary separately. This criterion of income ceiling for determining the eligibility under PMRY is applicable whether the beneficiary is staying separately or with the parents.

c. Further, the family would mean the applicant and the spouse, even if two or more brothers/sisters live together, they will constitute different families and hence will be eligible for assistance under PMRY, if they satisfy other eligibility criteria laid down under the PMRY Scheme.

d. For the married women candidates, the income of their parents-in-law shall be considered.

e. If the applicant was adopted 3 years prior to the date of his/her application for loan under PMRY, the annual income of the adopted parents would be taken into account to determine family income. If a period of adoption was less than 3 years, as on the date of his/her application for loan under PMRY, the annual income of his/her own parents will be taken into account to determine family income.

f. Applicant’s family income statement is to be supported by an affidavit. It is for the Task Force to be satisfied about the applicant meeting the family income criteria. In case of doubt, the Task Force can ask for additional documents or follow an appropriate procedure. Once a case is recommended by the Task Force, it should be presumed that the applicant meets the income criteria unless there is evidence to the contrary. Banks need not question the recommendations of the Task Force on grounds of family income, unless they have concrete and objective evidence. In such a case, the case shall be referred back to the Task Force with the evidence for appropriate action. Government of India have decided to allow applicants to submit a declaration on plain paper incorporating the contents of the affidavit along with the applications submitted to the DIC/banks. The formal affidavit on the relevant non-judiciary paper shall be submitted to the bank only when the loan amount is sanctioned.

iv. Residency

a. Beneficiary should be a permanent resident of the area for three years. Here 'Area' means the district. If the applicant is desirous of setting up venture at any place in the district in which he is residing for the last 3 years, he is eligible for assistance. Newly married women beneficiaries are exempted from fulfilling the above criterion of residency and instead the residency criterion is applied to the in-laws/husband of the married beneficiaries.

b. Document like ration card will constitute enough proof for this purpose. In its absence, Residency Certificate issued by the Deputy Commissioner/ District Magistrate or any other appropriate authority designated by the State Government may be accepted. In the absence of ration card, any other document to the satisfaction of District Committees/Task Force may be accepted as a proof of residence.

v. Other conditions

a. A defaulter to a bank/financial institution will not be eligible for assistance under the scheme. Further, if a member of a family is a defaulter other members of the family will not be eligible for assistance.

b. More than one member of the same family may not be assisted under the scheme. However, another member of the same family having been assisted under any other Central/State/State-owned Corporation sponsored scheme (with/without subsidy) need not be a bar to assistance under PMRY.

c. A person who had been earlier assisted under a subsidy-linked programme will not be eligible for assistance under the PMRY.

5. Eligible Activities

Assistance will be provided for all economically viable activities including agricultural and allied activities but excluding direct agricultural operations like raising crop, purchase of manure, etc. However, it may be ensured that the beneficiary obtains statutory approvals that may be required under any law in force and disbursement by bank could be related to such clearances, if any. The implementing agencies will decide the eligibility and classification of the activity proposed to be financed under industry/service/business sectors.

6. Relaxations of PMRY Norms for North-East Region

Government of India has decided to provide certain relaxations on the various parameters in the implementation of PMRY for the seven North-East Region States of Assam, Mizoram, Manipur, Tripura, Nagaland, Arunachal Pradesh and Meghalaya. These are:

a. The PMRY is expanded to cover areas of horticulture, piggery, poultry, fishing, small tea gardens, etc. so as to cover all economically viable activities.

b. Family income not exceeding Rs. 40,000/- per annum for each beneficiary along with his/her spouse and the parents of the beneficiary.

c. The upper age limit is relaxed to 40 years in general. For the SC/ST/Ex-servicemen, physically handicapped and women, the relaxation shall be upto the age of 45 years.

d. The subsidy will be @ 15 percent of the project cost with a ceiling of Rs. 15,000/- per borrower. Banks will be allowed to take margin money from the borrower varying from 5 percent to 12.5 percent of the project cost so as to make the total of subsidy and margin money equal to 20 percent of the project cost. (Applicable to cases sanctioned from 01.04.1999).

7. Project Funding

(i) Project preparation

The District Industries Centre (DIC)/Small Industries Service Institute (SISI) (for metropolitan cities) or NGOs, Industries Associations or other agencies will identify and forward the applications to the District Level Committee/Metropolitan City Committees to be set up by the Ministry of Industry, Government of India. After scrutiny by the committee, applications will be sponsored to banks. Banks may satisfy themselves about viability and bankability of the project.

(ii) Components of project cost

a. A borrower under the scheme will be eligible for sanction of a composite loan (working capital + term loan) based on project cost upto Rs. 2 lakhs for other than business sector. The project cost for business sector will be restricted to Rs. 1 lakh.

b. The requirement of funds by the borrower for acquiring a suitable accommodation either by way of lease/rent or on ownership basis to set-up a shop, etc. may form part of the project cost, provided it is considered as essential by the financing bank. The total project cost, including such requirement should be within the stipulated limit indicated above.

c. In case of PMRY beneficiaries carrying on their activities in rented premises, the lease period as available may be taken, subject to renewal as in the case of non-PMRY loans. It is for the banks to ensure that lease agreements are renewed at the expiry of lease period during the currency of the loan.

iii. Loan amount

a. Banks may provide a composite loan (term loan/working capital) not exceeding Rs. 95,000/- or Rs. 1,90,000/- per individual borrower depending upon whether the project is in the business sector or other than the business sector respectively, after satisfying about the viability and bankability of the project.

b. The working capital component should be determined based on actual requirement to avoid under-financing of units which may lead to sickness of the project.

c. Banks should disburse the amount inclusive of margin money deposited by the borrowers.

iv. Margin

a. Banks will be allowed to take margin money from the borrower varying from 5 percent to 16.25 percent of the project cost so as to make the total of subsidy and margin money equal to 20 percent of the project cost.

b. The margin money deposited by the borrower should not be retained as security for the advance.

v. Subsidy amount

a. Subsidy eligible is 15 percent of the project cost, subject to a ceiling of Rs. 7,500/- per borrower in States other than North Eastern States. In case the amount disbursed is less than the original project cost, the subsidy eligibility will be restricted to 15 percent of the revised project cost.

b. In the case of Dairy loans, where the disbursement will be made in two stages (second batch of animals after six months), the branches may be advised to claim the subsidy from the Head Office only at the time of the final (second) disbursement of the loan.

vi. Joint ventures/partnerships

a. Group activity stands a better chance of success because it is easier to provide back up support and marketing linkages. Group activities should, therefore, be encouraged.

b. If more than one applicant join together and form partnership concern, they will be eligible for a total loan and subsidy, subject to the condition that proportionate loan/subsidy to each borrower does not exceed the prescribed ceiling per individual borrower, as indicated in 7(iii)(a) and 7(v)(a) above and the total project cost should not exceed Rs. 10 lakhs. Also, the individual ceiling on share of the project cost for each one of the partners will be dependant on the nature of the activity undertaken by the firm.

c. It would be preferable if the shares of partners were equal. All the partners should be prima facie eligible for assistance under PMRY scheme.

d. Co-operative Societies, not being partnership, are not eligible for assistance under PMRY.

vii. Security

a. Apart from the margin and personal guarantee provided by the borrower as also the subsidy by the Government, the borrower will hypothecate/ mortgage/pledge to the bank assets created out of bank loan.

b. If no fixed assets are proposed to be created in the case of loans exceeding Rs. 50,000/-, banks should exercise special care while sanctioning such cases.

c. Borrowers will not be required to give collateral security under Industry Sector projects with the cost upto Rs.2.00 lakhs and upto Rs.1.00 lakh for business and service sectors. Banks overtly/covertly should not insist on collateral from the borrowers under PMRY, even though they are expected to exercise special care while scrutinising cases of loans exceeding Rs. 1 lakh where no fixed assets are created. In case of partnership, the exemption from collateral is limited to Rs. 1 lakh per person, participating in the project. The exemption limit in respect of partnership projects in Industry Sector for obtention of collateral security will be Rs.5.00 lakhs per borrowal account in the tiny sector. Even where offered, such collateral security or guarantee should not be accepted.

viii. Sanction/disbursement of cases

a. Disbursement is a continuous process and disbursement of loans may be effected even after the completion of that particular programme year. While processing the applications sponsored by Task Force Committees, the branches may please ensure that -

As far as possible the disbursement should be effected in minimum number of instalments, sanctions are evenly paced and not pushed to the last quarter of the year;

The reasons for rejection of the applications are clearly spelt out and made available every month to the District Co-ordinators so that the Task Force Committees could review the matter; and

Number of instalments.

b. The sanctions accorded by banks under the scheme should be final and clearly indicate all the conditionalities to be fulfilled by the beneficiaries for the disbursal of loan amounts. This would enable the beneficiaries to comply with the bank's requirements well in time so as to enable the banks to complete the disbursement of loan amount sanctioned before the expiry of the closure date.

ix. Repayment schedule

a. Repayment schedule may be fixed in the range of 3 to 7 years after an initial moratorium as may be prescribed by the financing bank, depending on the nature and profitability of the venture. Working capital limit should be reviewed periodically.

b. The repayment schedule is to be worked out only for the term loan component.

c. In cases where the borrowers are in a position to repay the loan earlier than the repayment schedule fixed by the bank, the repayment of PMRY loan may be rescheduled with a minimum period of 3 years at the discretion of the Branch Manager so that the borrower receives an early credit of subsidy and is able to avail of additional loan facilities, if desired.

d. Recovery of loans is the responsibility of the banks concerned. Banks have been advised to constitute recovery cells at Regional / Controlling Office level to improve recovery rate. They may seek assistance of the implementing agencies in this regard. The State Government/Committees will monitor the recovery of the loans and help the banks in the matter. In case of bona fide default, rescheduling is preferred.

x. Additional finance

a. Additional finance towards working capital may be provided to the extent that the term loan component and working capital sanctioned should not exceed the prescribed ceiling amount fixed for the borrower (i.e. Rs. 1 lakh or Rs. 2 lakh depending upon whether the loan is for business sector or other than business sector) or for all the partners collectively and proposal for additional finance should also be approved by the Task Force Committee.

b. The additional assistance furnished by the banks would be considered against the original target allocated to that branch. In other words, this cannot be treated as a fresh case for that particular bank branch.

xi. Penal interest/processing charges

No penal interest or processing charges should be levied on loans granted under the PMRY scheme.

8. Subsidy Management

i. Subsidy disbursal

The subsidy will be made available by Government of India in advance and passed on to the banks through Reserve Bank of India. The subsidy portion will be kept as fixed deposit with the banks in the name of the borrower for the duration of the term loan component and will earn interest at the rate applicable to the relevant term of maturity. The subsidy deposit will be available to the borrower for adjustment against the last instalment(s) due under the term loan component. In any case, the fixed deposit should run for a minimum period of 3 years and would be available for adjustment only thereafter.

ii. Effective date of FDR

a. As the subsidy amount is remitted in advance to the Head Office of the bank, the date of the fixed deposit created out of subsidy amount will be the date on which the last instalment of the loan is disbursed by the branch. From that date, no interest will be charged on the subsidy portion of the loan.

b. Even if the subsidy amount is received by the Head Office after the loan is disbursed, to avoid inconvenience to the borrowers, the FD shall run from the date on which the last of instalment of the loan was disbursed and no interest on the subsidy portion of the loan shall be charged from that date.

iii. Non-payment of interest on FDR representing subsidy

On the subsidy amount retained by the banks as fixed deposit in the name of the beneficiary, no interest will be paid by the banks and on the portion of the loan-representing subsidy, no interest would be charged by banks. The rate of interest to be charged will be decided on the basis of the loan amount net of subsidy.

iv. Eligibility of subsidy

a. If the PMRY loan is closed prematurely, the borrower will not be eligible for subsidy. Similarly subsidy will not be available in the case of misutilisation of loan, abandonment of the project by the borrower, ineligibility of the borrower due to his not complying with the criteria laid down under the scheme etc. As in all such cases, loans would not have sub-served the central objective of the scheme; the borrower will not be eligible for subsidy.

b. However, in cases where the loans have become bad/doubtful of recovery and in respect of which banks file claim with DICGC, the amount of subsidy deposit may be adjusted towards the loan outstanding even before the expiry of 3 years, provided the misutilisation occurs beyond the control of the bank.

c. It will be necessary for banks to ensure that the appraisal, procedure for sanction and disbursement of loans and post-disbursement supervision, etc. are carried out in accordance with the instructions issued by the Bank's Head/Controlling Offices in order to be eligible for the above benefit and produce necessary records, if so required.

d. The provision regarding penalty for premature closure of term deposit will not apply in such cases. However, in cases where the beneficiaries are ineligible for assistance under the scheme, the subsidy will not be allowed to be adjusted towards the loan under any circumstances and will have to be refunded.

v. Audit certification

Each bank should obtain a certificate from its Statutory Auditor certifying the correctness of the claims made by the bank in respect of subsidy under the PMRY Scheme and put up to the Board of Directors before 30th September every year. In this respect, the under noted procedure may be followed for issue of certificate by the Statutory Auditor:

Bank branches which are selected for external audit shall forward to their Head Office a certificate issued by the External Auditors/ Concurrent Auditors to the effect that the entries in the registers and other relevant books as also the claims made by the bank branches in respect of subsidy amounts relating to loans sanctioned under PMRY in the previous programme year are correct.

In respect of other bank branches, where no external auditors/ concurrent auditors are appointed, the branch managers themselves may furnish the necessary certificates to the Head Office.

On the basis of certificates (issued by the external auditors/concurrent auditors/branch managers, as the case may be) received from bank branches, the Statutory Auditors of the banks may issue a consolidated certificate in respect of subsidy amount released by the banks as a whole during the previous program year under PMRY and the same may be put up to the Board of Directors [as per the format given in the Annexure I].

The subsidy accounts will be subject to Audit by Accountant General.

vi. Subsidy utilisation statement

a. The Government of India have finalised a format given in Annexure II for reporting the data relating to subsidy utilisation/additional subsidy requirement statement by the bank on quarterly basis effective from 30th September, 1999. Accordingly, banks may report the cumulative position of total Sanctions/Disbursements/Subsidy Utilisation/Requirements relating to each programme year at the end of each quarter on the basis of instructions furnished in the note to the format.

b. Banks may obtain from their controlling offices/branches, the data in the prescribed format at monthly intervals and ensure submission of consolidated statement on quarterly basis to RBI.

vii. Adjustment of surplus subsidy

a. Banks may utilise the surplus subsidy available with them in respect of any programme year towards their subsidy requirement of any other programme year within the band of four programme years viz. 1993-94, 1994-95, 1995-96 and 1996-97. The subsidy amounts for the respective programme years wherever so adjusted, should be clearly indicated/reported to RBI under quarterly subsidy utilisation certificate/statement.

b. Banks may also utilise the surplus subsidy available with them under PMRY for the programme years 1993-94 to 1996-97 towards their subsidy requirements of programme year 1997-98.

c. Banks may also utilise the surplus subsidy available with them under PMRY for the programme year 1997-98 after meeting all the subsidy requirements of 1997-98 towards their subsidy requirements of programme year 1998-99.

d. Banks may also utilise the surplus subsidy available with them under PMRY for the programme year 1998-99 after meeting all the subsidy requirements of programme year 1998-99 towards the subsidy requirements of programme year 1999-2000.

9. Training/Infrastructure Expenses

a. Training/Infrastructure component at the rate of Rs. 1,500/- per beneficiary will be given to the State Government/Union Territories after getting confirmation that loans have been sanctioned by banks. The training programme should take care of special needs of the educated.

b. Educated women need special attention as the incidence of unemployment among them is higher than among men and their access to employment and training is conditioned by social circumstances and attitude. Service Sector is probably the one that suits them most. Manufacture and repairs of electrical and electronic gadgets, watch assembly and spares, computer software, crèche-day care services etc. are some important activities with scope for employment of educated women and they should be encouraged to take up these activities. They should be given larger access to the training facilities in manufacture of computer parts, software development, repair of TV and electronics equipment, running of printing presses, pharmacies, dry cleaning and in small service industries like restaurants, small guest houses, etc.

c. Industry and other users of skilled manpower, who are aware of emerging requirement of skill, should be involved in manpower development. Chambers of Commerce and Industry should also come forward to provide training in entrepreneurship and promote self-employment. Similar roles also need to be played by the local industries associations. It is intended that spare capacity available in ITI, Polytechniques and other suitable training institutes run by Government, private or voluntary organisations will be utilised by running double shifts and by suitable amendments in the curriculum and course durations. Course duration should be normally for a month. However, the District PMRY Committee can change the duration and prescribe the duration for new trade.

d. Training under the industry sector may be given for a period of 15-20 working days. Under the service and business sector, the training period shall be 7-10 working days.

e. Where a borrower has undergone an equivalent or higher Entrepreneurship Development Training of same or longer duration conducted by a reputed institution or bank, the borrower may be exempted from training under PMRY. In such cases, the General Manager of the concerned District Industries Centre (DIC) may issue a certificate stating therein the training, which has already been attended by the borrower, and exempting him from attending training under PMRY to enable the banks to disburse the loans.

f. Banks should be given the first preference (along with stipulated funds) in case they come forward for organising training for PMRY borrowers. The banks having necessary infrastructure at the State-level may in consultation with the State Governments organise training programmes for PMRY borrowers.

10. Other Aspects

i. Deceased borrowers

a. In the case of death of a borrower under PMRY, it would be in order for banks to transfer the liability to the legal heir/near relative of the deceased or any third party willing to take the liabilities and continue to run the unit/activity, even if they do not satisfy the criteria stipulated under the Scheme, provided the person to whom the unit/activity is thus transferred, without changing in any way the terms of the loan, satisfies the lending bank regarding timely repayment of the loan instalments.

b. The subsidy amount will also accrue only to the transferred account.

c. If, however, an arrangements of this type is not feasible, banks may take steps to recover the loan and adjust the subsidy amount towards the dues of the deceased beneficiary.

ii. Dissolution of partnership

In case of dissolution of the partnership on retirement of one partner and the remaining partner agreeing to continue the activity as a sole proprietor by accepting all the liabilities of the firm, the following procedure may be followed:

In case the activity proposed to be continued by the remaining partner is within Rs. 1 lakh, the subsidy would be admissible to him and the retiring partner shall not be eligible for the subsidy amount. If subsidy is already kept in deposit, the same will have to be closed and the amount refunded to Head Office for credit to the subsidy account maintained by them.

In case it is above Rs. 1 lakh, no subsidy shall be admissible to the remaining/sole partner continuing the activity and the retiring partners shall as well not be eligible for subsidy under PMRY and the entire amount of subsidy claimed by the bank branch in respect of partners of the firm, will have to be refunded to the Head Office for credit to the subsidy account.

iii. Issue of 'No Due Certificate'

The borrowers generally find it difficult to obtain ‘no due certificate’ from all the banks functioning in the area and there is also delay in the issue of such certificate by the banks. It will, therefore, be presumed that the referred banks have no dues/objection, if no reply is received within one month of the date of issue of verification request by the bank.

iv. Issue of pass books to PMRY borrowers

Banks may issue passbooks to PMRY borrowers in Regional Languages to facilitate maintenance of a record of disbursements made/repayments effected etc.

v. Carryover of applications

The cases recommended by DIC during a year and pending with banks at the end of the year should, as a rule, be considered first for sanction/ disbursement in the next financial year and such pending cases should not be returned on the ground 'already reached target'.

vi. Other incentives

A borrower under PMRY may be given other types of incentives by the State Governments like industrial sheds at concessional rates, plots, etc. The borrower can also avail indirect cash incentives like waiver of Sales Tax, etc. In case of monetary incentives, the States/Union Territories could extend them, but the promoters’ contribution of 5 percent of the project cost should not be diluted so as to maintain the promoter's stake in the project.

vii. Closure of disbursements for cases sanctioned during a programme year

a. At times, the cases sanctioned in a particular year remain undisbursed in the following year for various reasons such as borrowers lose interest or are absorbed in other avocations etc. Banks may treat the cases sanctioned in a particular year as lapsed after a period of 9 months in the financial year following and issue notices to such persons under registered cover and also inform the DICs the cases in which the prospective borrowers did not turn up. In all such cases, the DICs would then try to contact the applicants. Wherever required, the DIC should re-sponsor the cases of applicants thus left out for whatever reasons. These will be treated as fresh cases in the respective financial year. These instructions will not apply to cases which have been partially disbursed.

b. Disbursements of loans sanctioned under PMRY during a financial year should be completed and closed by the bank branches by the end of 10th month of the following year, i.e., positive before the 1st of February.

c. As a special case, the final date for closure of disbursement of the loans sanctioned under PMRY during the years 1993-94, 1994-95 and 1995-96 was set at 1st June, 1997.

d. The period of closure of sanctions and disbursements of loans under the PMRY scheme for the year 1997-98 was fixed at the end of 6th month and 9th month of the following year respectively. Accordingly, for the year 1997-98, sanctions lapsed on 01.10.1998* and disbursement had to be completed by 01.01.1999*. In this regard, the cases sanctioned during the period from 01.04.97 to 31.03.98 constituted the total number of cases sanctioned during the programme year 1997-98. Sanctions made after 31.03.98 did not count for sanctions made during 1997-98 although the applications had been received during 1997-98. Such sanctions counted for programme year 1998-99.

* These dates were extended to 31.12.98 and 01.02.99 respectively.

e. In respect of cases sanctioned during programme year 1997-98, where no disbursement had been made by 01.10.98, the sanction lapsed as on that date and the instructions relating to lapsed sanctions stated in para (a) above were to be followed in such cases.

f. The date of closure of disbursements for the cases sanctioned during the programme year 01.04.98 to 31.03.99 under PMRY was set as 31.12.99 after which sanctions where no disbursements had taken place for the programme year 1998-99 lapsed. In cases where disbursements are partial, the procedure for treating partially disbursed cases shall be allowed to be applied after 31.12.99 as indicated in para (d) above. As the disbursements would close for the programme year 1998-99 by 31.12.99, banks should submit final subsidy utilisation certificate for all claims in the prescribed format latest by 28.02.2000.

g. The cut off dates for lapsing of sanctions and completion of disbursements for loans sanctioned during 1999-2000 were 31-10-2000 and 31-12-2000 respectively. In case of partial disbursement of the cases during 1999-2000, the subsidy claims of banks freezed on the amount disbursed as at close of 31-12-2000. Thereafter, the undisbursed portion of the loan would be disbursed by banks without subsidy benefit. The subsidy portion could be sanctioned and disbursed as additional loan by banks.

h. In case of partial disbursement of cases sanctioned during the years 1993-94 to 1995-96, the subsidy claim of the bank was to freeze on the amount disbursed as on the closure date, i.e., 01.06.97. Thereafter, the undisbursed portion of the loan could continue to be disbursed by the banks, without asking for subsidy. The subsidy portion could be sanctioned and disbursed as additional loan.

i. In respect of cases sanctioned during 1996-97, where partial disbursements had taken place, the cut-off date for completion of disbursements as on 01.02.98 was not extended and banks were to follow the procedure started in para (h) above for completion of disbursement.

j. In respect of part disbursement of cases sanctioned during 1997-98, the subsidy claim of the bank freezed on the amount disbursed as on the cut-off date, i.e., 01.01.99. Thereafter, the undisbursed portion of the loan could be disbursed by banks but without the benefit of subsidy. In order to avoid under-financing of the activity, the subsidy portion due on the undisbursed amount could be sanctioned and disbursed as additional loan to the borrowers by banks.

k. In case of partial disbursement of cases sanctioned during the years 1993-94 to 1995-96, the subsidy claim of the bank freezed on the amount disbursed on the closure date i.e. 01.06.1997 and in respect of cases sanctioned during 1996-97 for partly disbursed cases, the cut-off date was 01.02.1998. As eligible disbursements had already been completed, banks were required to report the utilisation of subsidy for the respective programme years from 1993-94 to 1996-97 to RBI in the prescribed format to enable reconciliation of subsidy amount. Banks were to ensure that all subsidy claims of their branches were included under respective programme years.

l. The cut off dates for lapsing of sanction and completion of disbursements for cases sanctioned during 2000-2001 will be 31-10-2001 and 31-12-2001 respectively.

Section-II

PMRY-Implementing Agencies and Operational Guidelines

11. Implementation

a. The district being well established geographical units for many programmes it is proposed that co-ordinated implementation of the programme will be undertaken at the district level.

b. State/Union Territory Government may select and declare one Agency as Implementing Agency out of the District Industries Centre (DIC)/Small Industries Service Institute/Directorate of Industries/District Urban Development Agency (DUDA) in four metropolitan cities of Delhi, Mumbai, Calcutta and Chennai. In other areas, they may select and declare either the District Industries Centre or District Urban Development Agency. This agency in consultation with the banks of respective areas will be responsible for the formulation of self-employment plans, their implementation, monitoring under the overall supervision/guidance of the District PMRY Committee. They are required to formulate location specific plans of action based on realistic demand assessment of various activities and their absorption capacity.

c. The District PMRY Committees will function as a nodal agency for the formulation of self-employment plans, their implementation and monitoring. The Committee would set up Task Force for the purpose. At district level, the Task Force will comprise of a Chairman who will be senior officer of the implementing agency preferably head of the agency, e.g., General Manager of District Industries Centre, Director in case of SISI, Additional Director of Industries Centre, in case of Directorate of Industries, Vice Chairman in case of DUDA. Other members of the Task Force will be representatives of -

d. The Task Force/PMRY Committee at four Metro centres is responsible for

e. The Task Force would invite applications from eligible persons through advertisements in local newspapers. These applications will be approved by the Task Force and would be recommended to the concerned bank branches. All the cases received by the Branch Managers after recommendation by the Task Force Committee would be disposed of expeditiously.

f. Implementation of the Scheme by District PMRY Committee or by Task Force set up for the purpose involves identification of beneficiary, selection of specific avocations, identification of the support system required by the beneficiary, escort services and close liaison with the banks and other local agencies concerned with industry, trade and service sectors.

g. In four metropolitan cities, PMRY Committee will be similarly constituted.

h. In the fifth meeting of the High Powered Committee, it was pointed out that the implementation of PMRY would improve with a more detailed scrutiny at the Task Force level, as well as association of concerned bankers. The quality of scrutiny would also improve with more time available with the Task Force. It was, therefore, decided that the States/UTs may constitute Sub-divisional Level or Block Level Task Forces as per constitution given in Annexure III. To maintain a certain quality of scrutiny, only one of the levels below the District Task Force may be chosen. The Subordinate Task Forces would only scrutinise the applications received by DIC and interview the candidates. Sub-ordinate Task Forces may, however, forward the approved cases directly to the bank branches.

i. In case of any one of the Subordinate Task Forces being allowed to function, the State/UT should for the purpose of scrutiny and interview, specify the jurisdiction of the District Task Force. All other functions of the District Level Task Forces like receipt of applications, reporting process, assistance to beneficiaries etc. shall continue with the District Level Task Force/General Manager, DICs Office.

j. The decision to constitute the Sub-ordinate Task Forces shall have to be taken in consultation with the respective convenor banks of the State/UT.

k. In addition to sponsoring of applications by Task Forces as above, banks themselves may also receive applications directly from the eligible persons under the Scheme. However, such applications should be sent to the sponsoring agency with their observation on the viability and bankability of the project. Sponsoring agencies would formally sponsor such applications back to the bank branches for sanction of loan.

l. For better implementation of the scheme, the State Government may restrict the number of lending banks in any area but this decision may be taken in consultation with the District Committee/Sub-Committee.

12. Monitoring

a. The Scheme will be monitored at district level by District PMRY Committee, metropolitan City Committees or by Sub-Committees set up for the purpose at State Level by State PMRY Committee and at Central Level by High Powered Committee under the Chairmanship of Secretary (SSI & AGI). Problems of implementation, co-ordination and monitoring are to be sorted out by this committee, which is to meet once in a month.

b. Monthly Progress Report in the prescribed proforma given in Annexure IV will be sent to the Directorate of Industries where it will be compiled and sent to the office of Development Commissioner. Once in a quarter, state level Committee will review the progress and send the report in the quarterly proforma along with remarks to the office of the Development Commissioner, in the prescribed proforma given in Annexure V.

c. The progress of the scheme will also be monitored by the District Consultative Committee (DCC) at the District Level and by State Level Bankers Committee (SLBC) at the State Level during their periodic meetings.

d. In order to tackle the problem of delays, the district level co-ordinators of banks shall enquire into the causes of major irregularities, more particularly in respect of bank branches performing at levels of less than 50 percent of the district average in terms of sanctions and disbursals. He should also look into the complaints regarding collateral. A report shall be submitted by him every month on the problems/issues at these bank branches in the district PMRY Committee and Task Force Committee for discussion and for recommending action at appropriate levels in the banking system and by the OMBUDSMAN, where appropriate.

e. There is a need for ensuring reconciliation of figures of sanctions and disbursals as reported by the States and the banks. The district level co-ordinators of banks shall reconcile the figures of applications recommended and sanctioned with the data of the District Industries Centre as per the MIS pattern notified by RBI.

f. Monitoring the performance of the branches

Banks may arrange to check at random the performance of a few branches under PMRY and initiate action against the Branch Managers whose performance is found to be wilfully inadequate or inappropriate.

g. Review notes

Banks should put up to their Board review of performance under PMRY on a quarterly basis and send a copy to the Chief General Manager, Rural Planning & Credit Dept., Reserve Bank of India, Central Office, Mumbai for information.

13. Evaluation

i. The Government of India will carry out concurrent evaluation on regular basis. Reputed institutions, organisation and NGOs in the States will be identified to carry out survey of the beneficiaries. Institutions and organisations for survey will be selected in consultation with State Governments for suitable follow up action. Progress report received from the States/UTs along with the concurrent evaluations will be reviewed in the High Powered Committee at Central level. Immediately on receipt of targets from the Central Government, State Government/UTs would convey district-wise targets to each district. District Committee will allot targets within the district to the banks. In the metropolitan cities, this work will be undertaken by the metropolitan City Committee. The District PMRY Committee/Committees constituted for metropolitan cities or sub-committees thereof would invite application from eligible persons through advertisements in local newspapers. Publicity would also be given by display on Notice Boards in the Banks and BDO's offices.

ii. These applications will be approved by the District PMRY Committee/ Committees constituted for metropolitan cities and would be recommended to the concerned bank branches. The number of applications recommended would be at least 25 percent more than the target fixed for the branch, to take care of rejections at the bank level.

iii. All the cases received by the Branch Managers after recommendation by the Committee would be disposed of expeditiously.

iv. Training Institutions should be identified and module for training should be kept ready by the District Authorities before the loan is sanctioned.

v. As soon as the cases are sanctioned, intimation will be sent by banks to District PMRY Committees/Committee constituted for metropolitan cities or sub-committees that training activity can start.

vi. In order to ensure that the desired results are achieved, all activities should be completed in a time bound manner and difficulties experienced should be sorted out in the District PMRY Committee/Metropolitan City Committee or Sub-committees thereof.

vii. Recommendations by Task Force set up for intensive study of Implementation of PMRY during the year 1993-94 (Annexure XIV).

14. Involvement of Non-Government Organisation

NGOs can play a very important role in the implementation of the PMRY. The scheme seeks to associate reputed non-governmental organisations (NGOs) in implementation of PMRY Scheme. They can be involved right from identification, motivation, and selection of beneficiaries and preparation of project profile. They can also help the borrower in proper management of the assets, marketing of the products, repayment of the loan instalments etc. Training of beneficiaries is another area where they can play a very useful role. States/ UTs should work out methodologies to associate the reputed NGOs in manner, which will bring the scheme to the doorstep of the potential beneficiaries.

15. Association of KVIC in the Implementation of the PMRY

i. Government of India have advised that the Khadi & Village Industries Commission (KVIC) will also be associated in the implementation of the PMRY.

ii. The KVIC shall separately and in addition to the State Government/Director of Industries call for applications from the eligible candidates for activities within their purview. The KVIC will not prevent, by any means, the eligible persons from applying directly to the DIC. This would ensure availability of a parallel channel of processing, thus giving the beneficiaries an option to choose between the DIC and the KVIC for processing etc. applications pertaining to industries otherwise within KVIC's purview.

iii. It is expected that the KVIC shall adopt the same form of application as may be in vogue in the concerned States for inviting applications under the PMRY. They (KVIC) may, however, introduce some additional columns in the form as may be required for their purposes. The revised form, if any, adopted by the KVIC shall be widely publicised for general information and copies thereof supplied to Banks, DICs etc.

iv. The applications received by the KVIC in a district shall be scrutinised by the same KVIC office and thereafter the requisite number (mutually agreed to with the DIC) of copies of each application found eligible on a prima facie basis shall be sent to the District Level Task Force. After formal processing, all such applications received from the KVIC shall be put up by the DIC in the next available meeting of the District level Task Force. The DIC shall ensure that an authorised representative of the KVIC is invariably present whenever KVIC sponsored cases are taken up for consideration by the Task Force.

v. The Task Force will scrutinise the case and on finding that the project proposal is eligible and suitable, shall forward the case to the concerned bank under intimation to the KVIC. (In the event of any sort of clarification becoming necessary, the case shall be returned by the bank to the KVIC directly under intimation to the DIC).

vi. The bank will thereafter scrutinise the case and while sanctioning the application simultaneously send intimation thereof to the KVIC as well as the DIC. In rejected cases, the applications shall be returned to the KVIC under intimation to the DIC.

vii. The KVIC shall provide escort service to an applicant during the course of his interaction with the banks. After banks sanction, the EDP training prescribed under the PMRY shall be organised by the KVIC. The training shall be supervised by the DIC. Training itself shall be carried out as per the norms in force and notified by Government of India. KVIC are at liberty, however, to include an element of skill development, where considered necessary by them, in the course content for the EDP. Escort service will be provided by the KVIC also at the stage of disbursal of loans and subsequently.

viii. The KVIC shall also (a) associate itself with post-disbursement assets verification; (b) give marketing support to the borrowers sponsored by them and (c) help in the recovery of loan instalments etc.

ix. While implementing the scheme, the KVIC shall follow the guidelines detailed above. All out efforts should be made to achieve the reservation stipulation in respect of SC/STs and OBCs (22.5 percent and 27 percent respectively) and preferential treatment to women.

x. In respect of cases sponsored by the KVIC, they shall be fully responsible for effective follow-up in the same way in which the DICs are responsible in respect of the other cases.

Section-III

PMRY-Target Allocation and Recovery Requirements

16 . Yearly Targets

a. Each year, the Government of India allocates targets under PMRY for each State/Union Territories for the programme year.

b. For the current year 2001-2002, the targets are detailed in the Annexure VI.

c. It was decided in the eleventh High Power Committee meeting held in February 2001 that the banks having less than 5 branches in a state, shall not be allocated targets, if total target of all the branches of that bank constitute 2% or less of the total target of the state.

d. In order to prevent bunching of applications at the end of the year, the controlling offices/branches may be advised to achieve quarterly progress targets as under:

Quarter	Sponsoring	Sanctions	Disbursement
1st	25%	10%	--
2nd	100%	50%	15%
3rd	125% *	80%	50%
4th	--	100%	80%
1st (succeeding year)	--	--	100%
* After 31st December, only the cases rejected by banks may be replaced.

e. Sponsoring of applications shall be limited to 125 percent of target and is to be completed by 31st December each year. Thereafter, fresh applications may be sponsored only to the extent of applications rejected by banks.

f. In regard to carry over of Applications pending on 31st March, banks should ensure that their branches follow the instructions contained in paragraph 11(vi) of the Guidelines on PMRY given in Annexure XIV and do not return pending applications to DICs at the end of the year and consider such pending applications first in the next programme year so that the same persons need not apply again.

g. In order to give preference to weaker sections, Government has decided to provide 22.5 percent reservation for SC/ST applicants and 27 percent reservation for 'Other Backward Classes' (OBC) applicants.

h. A fair and adequate share to the minorities and preference to women may be ensured.

i. Whenever additional targets are set by the Government of India for various States and the same are advised to the banks, they should issue necessary instructions to their controlling offices and branches to accept additional targets set for them and to ensure that the same are achieved.

17. Reporting Requirements

(a) Quarterly progress reports under the scheme may be furnished to RBI as per proforma given in the Annexure IX. The same format may also be used by bank branches/controlling/Regional/Zonal offices for monitoring the implementation of the scheme. Banks should advise their branches/controlling offices to ensure the following:

Name of the State Union/Territory

North Region

Northern Eastern Region

Eastern Region

Central Region

Western Region

Southern RegionM

All India

(b) Banks are required to submit 'Monthly Progress Report' under the scheme to RBI and to implementing agencies in the prescribed formats given in Annexure VII & VIII within 7 days of the following month furnishing details of Target/ Applications received / sanction /disbursement and pending applications.

The banks are required to submit quarterly progress statement as per format given in Annexure IX, furnishing details of sanction / disbursements made to SC/ST OBC and Women to RBI within 45 days after the completion of quarter.

(c) The copies of monthly and quarterly reports may also be sent to Government of India, Ministry of Industry at the following address:

(d) The Government of India had desired to obtain the subsidy utilisation certificate indicating the subsidy released to Head Office of the bank by RBI and utilised by them during the period 1993-94 to 1998-99 as on 31.03.99 in the prescribed format given in the Annexure X. The statement for the above period duly certified by General Manager (Priority Sector) as well as Internal Auditor of the bank should be forwarded directly to -

(e) Recovery Performance

Banks should submit to RBI a report on the recovery position in respect of PMRY every half-year (March/September) within 45 days from the due date as per format given in Annexure XI.

18. Other Aspects.

(a) Banks would be eligible to avail of refinance under Small Industries Development Bank of India (SIDBI)/National Bank for Agriculture and Rural Development (NABARD) Schemes to the extent that these are available for the purpose specified.

(b) The loans under the scheme will be eligible for Deposit Insurance and Credit Guarantee Corporation cover as in the case of other loans.

(c) The Government of India have advised the Chief Secretaries of all State/Union Territories to help the banks in the recovery of loans. A copy of letter D.O.No.DIC-6(1)-93 dated 29.09.93 from Shri S.L. Kapur, Secretary, Ministry of Industries, Government of India, New Delhi addressed to the Chief Secretaries is given in the Annexure XII for information and guidance.

(d) The constitution and functions of the District PMRY Committee/State PMRY Committee are given in the Annexure XIII.

(e) Delegation of Powers

With a view to ensure quick disposal of applications for loans under PMRY, banks may consider review of the sanctioning powers of the Branch Managers, keeping in view their existing administrative set ups so that loan proposals over Rs. 50,000/- also get quickly sanctioned at the branches.

(f) The loans granted under the scheme will be treated as advances under Priority Sector. The loan applications should be disposed-off expeditiously.

Banks may issue suitable instructions to Lead Bank Officers and the branches to effectively participate and implement the scheme.

Section IV
Annexure I
Master Circular

PRIORITY SECTOR LENDINGS - SPECIAL PROGRAMMES

Audit Certificate

[Vide paragraph 8 (v)-Section I ]

We have examined the claim for Rs. ____________ for the period _________ to ________ made by the bank in respect of the subsidy due under the PMRY Scheme to provide self employment for educated unemployed youth framed by Ministry of Industry, Government of India with the book of accounts and other records at the Head Office of the said bank, the records and registers produced to us in respect of the claims relating to the advances made at the other offices of the bank and the audit reports by its concurrent/external auditors and certified statements received from the Officers-in-Charge of the offices as have not been audited. On the basis of such examination of the records, registers, audit reports, statements and the information and explanations given to us, we certify that to the best of our knowledge and belief the claim of Rs. ________________ is correct/not correct.*

We certify on the basis of the material indicated above that the amount due to the bank for the period from ___________to ___________ in respect of subsidy due under the said scheme is Rs. ____________ (Rupees ______________________ only).

Statutory Auditor

Place :
Date :* Full details of discrepancies to be furnished separately by way of Annexure.Next

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