PMEGP Interest Rate 2025 – Complete Official Information for Entrepreneurs

The PMEGP Interest Rate plays a crucial role for entrepreneurs applying under the Prime Minister’s Employment Generation Programme (PMEGP). Designed to support small businesses and self-employment initiatives in India, the scheme offers affordable credit through banks with government subsidy benefits. By checking the official PMEGP e-portal, applicants can find updated details on loan interest rates, repayment terms, and subsidy structures. Understanding the PMEGP Interest Rate 2025 helps new entrepreneurs plan their ventures effectively while ensuring lower borrowing costs. This government-backed initiative makes financing more accessible for rural and urban applicants across India.

Particulars	Details
Scheme Name	Prime Minister’s Employment Generation Programme (PMEGP)
Applicable Interest Rate	11% to 12% per annum (varies by bank)
Subsidy Provided	15% – 35% (based on applicant category & location)
Repayment Tenure	3 to 7 years
Loan Amount	Up to ₹25 lakh for manufacturing & ₹10 lakh for services
Where to Apply	Official PMEGP e-portal (www.kviconline.gov.in)

What is PMEGP Interest Rate?

The PMEGP Interest Rate refers to the annual interest charged by banks on loans sanctioned under the PMEGP scheme. Unlike personal loans or business loans that often carry higher rates, PMEGP loans are subsidised by the government, reducing the financial burden on entrepreneurs. The rate generally ranges between 11% to 12% per annum, depending on the bank and loan category.

The government subsidy, ranging from 15% to 35%, further reduces the effective cost of borrowing, making it easier for individuals from rural and urban areas to establish sustainable businesses.

Importance of PMEGP Interest Rate for Entrepreneurs

The interest rate under PMEGP determines how much an entrepreneur will repay over the loan tenure. Since the scheme is designed to promote self-employment and job creation, ensuring lower interest rates is essential for accessibility. Key benefits include:

• Affordable Financing: Lower interest compared to market business loans.
• Government Subsidy: 15%–35% margin money subsidy reduces repayment stress.
• Inclusive Growth: Available for rural, urban, SC/ST, women, OBC, and minority applicants.
• Long Tenure: Repayment period of up to 7 years provides flexibility.
• Support for MSMEs: Encourages micro and small business establishment in manufacturing and service sectors.

Step-by-Step Guide to Check PMEGP Interest Rate on the PMEGP e-Portal

To ensure transparency, applicants can verify the applicable loan interest rates and subsidy structures directly from the government portal. Here’s how:

Step 1: Visit the official PMEGP e-portal.
Step 2: On the homepage, go to Loan & Subsidy Information.
Step 3: Select the option Interest Rate & Repayment Details.
Step 4: Enter your project type (Manufacturing/Service) and location (Urban/Rural).
Step 5: The system will display the current PMEGP Interest Rate, subsidy percentage, and repayment tenure.
Step 6: Save or print the details for official use during loan application.

PMEGP Interest Rate for Different Applicant Categories

Category	Subsidy % (Rural)	Subsidy % (Urban)	Effective Cost of Loan
General Category	25%	15%	11% – 12% (before subsidy)
SC/ST/OBC/Women/Minorities/Ex-Servicemen	35%	25%	11% – 12% (before subsidy)
Special (NER, Hill & Border Areas)	35%	25%	11% – 12% (before subsidy)

After subsidy adjustment, the effective repayment liability for entrepreneurs is significantly reduced, making the scheme highly beneficial.

Example – How Subsidy Impacts PMEGP Interest Rate

Let’s assume an entrepreneur applies for a loan of ₹10 lakh under PMEGP in a rural area.

• Loan Amount Sanctioned: ₹10,00,000
• Interest Rate (Bank): 12% p.a.
• Government Subsidy: 25% (₹2,50,000)
• Effective Loan Amount after Subsidy: ₹7,50,000
• Repayment Tenure: 5 years

Here, although the official bank interest remains at 12%, the subsidy reduces the principal burden, lowering the effective cost of borrowing and EMIs.

PMEGP Loan Repayment Terms

• Repayment tenure: 3 to 7 years depending on loan amount.
• Moratorium period: Banks may allow 6 months to 1 year before repayment begins.
• Subsidy adjustment: Subsidy is credited only after successful project implementation.
• Prepayment: Allowed, subject to bank norms.

How Banks Decide PMEGP Interest Rate

While the Ministry of MSME has broad guidelines, actual PMEGP Interest Rates depend on the following:

1. Type of Project – Manufacturing projects may carry slightly higher risks than services.
2. Loan Amount – Higher loans may attract stricter repayment conditions.
3. Bank Policy – Different banks follow RBI guidelines but have independent policies.
4. Credit Profile – Applicant’s repayment history and financial stability are considered.

Key Benefits of Knowing PMEGP Interest Rate Before Applying

• Helps estimate monthly EMI and repayment burden.
• Assists in preparing a practical business plan.
• Provides clarity on how government subsidy will reduce costs.
• Prevents misinformation during the loan application process.
• Enables comparison with other business loan options in the market.

Frequently Asked Questions (FAQs)

Q1. What is the PMEGP Interest Rate in 2025?
The PMEGP Interest Rate ranges between 11% to 12% per annum, depending on the bank and project type.

Q2. Does the government provide an interest subsidy under PMEGP?
No direct interest subsidy is given. Instead, the government provides 15%–35% margin money subsidy, which reduces the effective borrowing cost.

Q3. How is PMEGP loan repayment calculated?
Repayment is based on the sanctioned loan amount, applicable bank interest rate, repayment tenure, and government subsidy credit.

Q4. Can the PMEGP Interest Rate change over time?
Yes, since it depends on RBI and bank policies, rates may vary slightly each year. Applicants must check the PMEGP e-portal for updates.

Q5. What is the maximum loan amount available under PMEGP?
Up to ₹25 lakh for manufacturing units and ₹10 lakh for service sector projects.

Final word about the PMEGP Interest Rate

The PMEGP Interest Rate is one of the most crucial factors in planning business finance under the Prime Minister’s Employment Generation Programme. With rates between 11% to 12% per annum and government subsidies ranging from 15% to 35%, entrepreneurs can secure affordable credit for manufacturing and service ventures. By checking official updates on the PMEGP e-portal, applicants ensure transparency, accuracy, and better financial planning. This initiative continues to empower India’s youth, women, and marginalized communities, making entrepreneurship and self-employment a reality in 2025.

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