What changed
The family income ceiling for PMRY eligibility was raised from Rs.40,000 to Rs.1 lakh per annum. Project cost limits were increased to Rs.2 lakh for business/service and Rs.5 lakh for industry sectors, with subsidy ceilings enhanced to Rs.12,500 (general) and Rs.15,000 (special states). The scheme now covers both rural and urban areas, and a revised quarterly schedule aims to prevent year-end bunching.
What it means for you
Banks must adjust their lending processes to accommodate higher loan amounts and subsidy disbursements under PMRY, while ensuring strict adherence to the new quarterly targets. The enhanced ceilings may increase credit demand, but banks in states with recovery below 35% need to urgently strengthen recovery mechanisms. The extension of the 2006-07 cut-off to June 30, 2007, provides a short window to clear pending cases.
What you must do
- Allocate the state-wise target of 3,75,690 to branches and ensure 125% sponsorship of applications.
- Implement the revised quarterly schedule to avoid year-end bunching of sanctions and disbursements.
- Formulate action plans for improving loan recovery in states where recovery is below 35% (as per Annexure B).
- Ensure SC/ST coverage of at least 22.5%, OBC 27%, women 30%, and equitable minority participation.
- Complete disbursement of all loans and subsidies by March 31, 2008, and process pending 2006-07 cases by June 30, 2007.
Who it affects
All Indian Scheduled Commercial Banks (excluding RRBs), District Industries Centres (DICs), Branches in states with low recovery rates, PMRY beneficiaries and Self Help Groups
What are the new subsidy limits under PMRY for 2007-08?
The subsidy ceiling is Rs.12,500 per beneficiary for most states, and Rs.15,000 for North-Eastern states, Himachal Pradesh, Uttarakhand, and Jammu & Kashmir. For Self Help Groups, the subsidy is Rs.15,000 per beneficiary, capped at Rs.1.25 lakh per group.
What is the deadline for achieving the 2007-08 PMRY target?
All loan disbursements and subsidy payments must be completed by March 31, 2008. For the 2006-07 programme year, the cut-off date for sanction and disbursement has been extended to June 30, 2007, with no further extensions.
How should banks handle pending applications from previous years?
Banks should coordinate with DICs to consider applications already pending, so that applicants do not need to reapply. The scheme also requires sponsoring 125% of the assigned target to ensure adequate pipeline.