Caught in Debt of of PMRY LOAN.

Entrepreneur

Caught in Debt of of PMRY LOAN.

sir, I have taken pmry loan from SBI. Now, I am not enable to repay the Loan amount. In the long duration I have paid some interest to the bank. Now, It is not possible for me to pay the interest and also the principal amount.

What i can do ? please help any body who knows the banking rules and practice.

In this regard, I can not agree with the advise of Mr. raj kumar makkad for the above question that he said, "In these circumstances, Bank can take your properties in possession and can try to recover its arrears within the framework of law."

Considering the nature of the PMRY Scheme, It can not be treated as a commercial loan but a center sponsored self emplyment scheme therefore, said "framework of law" can not be so punitive as warned by said Mr. raj kumar makkad, expert,

The follwing mentioned will enlight one with an appropriate interpretation so that one can answer above question appropriately.

 

 

PMRY SCHEME


PRIME MINISTER ROZGAR YOJANA (PMRY)


Prime Minister's Rozgar Yojana (PMRY) for providing self-employment to educated unemployed youth has been in operation since October 2, 1993. The Scheme aimed at assisting the eligible youth in setting up self-employment ventures in industry, service and business sectors. The scheme has been modifies to enhance its coverage and scope. The modified parameters are as under.
1. Age

(i) 18 to 35 years for all educated unemployed.
(ii) 18 to 40 years for all educated unemployed in North-East states, Himachal Pradesh, Uttaranchal and J&K.
(iii) 18 to 45 years for Scheduled Castes/ Scheduled tribes. Ex-servicemen, Physically Disabled and women.
2. Educational Qualification
8th pass. Preferance will be given to those who have been trained for any trade in Government recognized/approved institutions for duration of at least six months.
3. Family Income
The income beneficiary along with the spouse or the income of parents of the beneficiaries shall not exceed Rs. 40,000- per annum.
4. Residence
Permanent resident of the area for at least 3 years. (Relaxed for married men in Meghalaya and for married women in rest of the country).
5. Defaulter
Should not be a defaulter to any bank/ financial institution/Co-operative bank. Further, a person already assisted under other subsidy linked Government schemes would not be eligible under this scheme.
6. Activities Covered
All economically viable activities including agriculture and allied activities but excluding direct agricultural operations like raising crop, purchase of manure etc. An illustrative list and activities is available at DICs.

7. Project Cost
Rs. 1.00 lakh for business sector. Rs. 2.00 lakhs for other activities, loan to be of composite nature. If two or more eligible persons join together in a partnership, project upto Rs. 10.00 lakhs are covered. Assistance shall be limited to individual admissibility. Self Help Groups can be considered for Assistance under the Scheme provided:

. All the members of the Self Help Group individually satisfy the eligibility criteria laid down under the scheme.
. Membership of the group would not exceed 10 numbers.
. Maximum loan limit for a Self Help Group is Rs. 10.00 lakhs
. Assistance will be limited to individual eligibility under the Scheme.

8. Subsidy and Margin Money

(i) Subsidy will be limited to 15% of the MARGIN MONEY project cost subject to ceiling of Rs. 7,500/- per entrepreneur. Banks will be allowed to take margin money from the entrepreneur varying from 5% to 16.25% of the project cost so as to make the total of the subsidy and the margin money equal to 20% of the project cost. For North-Eastern States, Himachal Pradesh, Uttaranchal and J&K.
(ii) Subsidy @ of 15% of the project cost subject to a ceiling of Rs. 15,000/-

per entrepreneur for North-Eastern States, Himachal Pradesh, Uttranchal and J&K. Margin money contribution from the entrepreneur may vary from 5% to 12.5% of the project cost so as to make the total of the subsidy and the margin money equal to 20% of the project cost.

9. Collateral

No collateral for units in industry sector with project cost upto Rs. 2.00 lakhs (the loan ceiling under the PMRY). For partnership projects under Industry sector, the exemption limit for obtaining of collateral security will be Rs. 5.00 lakhs per borrower account. For units in service and business sector no collateral for project up to Rs. 1.00 lakhs. Exemption from collateral in case of partnership project will also be limited to an account of Rs. 1.00 lakh per person participating
in the project.

10. Rate of Interest and Repayment

Normal rate of interest shall be charged. Repayment schedule may range between 3 to 7 years after an initial moratorium as may be prescribed.


11. Reservation
Preference should be given to weaker sections including women. The scheme envisages 22.5% reservation for SC/St and 27% for Other Backward Class (OBCs). In case SC/ST/OBC candidates are not available, States/UTs Govt. will be competent to consider other categories of candidates under PMRY.

 

12. Training
Each entrepreneur whose loan is sanctioned is provided training as per details given below:
(i) For Industry sector:
. Duration 15 working days
. Stipend: Rs. 300/-
. Training Expenditure: Rs. 700/- per beneficiary

(ii) For Service & business Sector :
. Duration 10 working days
. Stipend: Rs. 150/-
. Training Expenditure: Rs. 350/- per beneficiary

13. Implementing Agency

The District Industry Centers and the Directorate of Industries are mainly responsible for Implementation of the Scheme along with the banks. District Level Task force : Senior official of the rank of Joint Director of District Industries Centre is the Chairman of Task Force Committee and the other members of the committee are as under. Lead Bank, representatives from two leading banks, District Employment Officer, Small Industries Service Institute and representatives from Zila anchayat, Deputy Director, District Industries Centre is the Ex-officio Secretary. One or more members from NGOs to be selected/nominated as members by the Chairman. The implementation of action plan involves selection of candidates, identification of economic activities, identification of necessary infrastructure, follow-up service and liaisoning with banks, local agencies, industry, business and service related organizations.


The Task Force Committee is responsible for;
i) Motivating and selection of candidates
ii) Identifying industry, service and business activities and prepare action plan
iii) Selecting subsidiary activities
iv) Recommending loans
v) Obtaining necessary permissions from related authorities quickly

Note: The above information is corrected as on 01.04.2004. The trainer shall provide the latest information about the Scheme by procuring it from the nearest DIC or by referring to the prevailing Government Gazette notification

 
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Entrepreneur

Above is a reply to the Article available at the URL: http://www.lawyersclubindia.com/experts/Caught-in-Debt-of-of-PMRY-LOAN--91591.asp

 
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practicing advocate

But bank will file a suit for recovery of money and after the decree execution proceedings will be initiated.

 
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Student

Mr.Soumendra Nath Thakur,

I totally agree what you wish to convey but would like to add that if we see from Bank's view point its objective is to secure its lawful interest.  Now the moot point is how the bank is to be made to understand that due to circumstances beyond your control you are unable to discharge your debt "at present".

In my humble view why don't you go and represent your predicament to the Bank officials and get the loan re arranged according to both yours and Banks understanding.

Mr.Rajeev is absolutely correct when he says that Bank does has a right to stake claim for the money you owe it that's why in right earnest why don't you take a initiative to represent to the Bank and seek its indugence to treat your case "COMPASSIONATELY - IN VIEW OF YOUR GENUINE AND BONAFIDE DIFFICULTY  - POSTPONING YOUR LIABILITY OR RESCHEDULING OF PAYMENTS.

You have not mentioned how much is the loan amount as there is always a scope of waiving off a part of interest part on the basis of discretion vested with Managerial cadre.

Best Regards

Daksh

 
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Entrepreneur

 

 

Dear Mr. adv. rajeev ( rajoo ) and Mr. Daksh,

 

Please be informed that I am not the person concerned in the stated PMRY loan rather the instant article was a a reply for another same named article posted by someone else available at the following URL http://www.lawyersclubindia.com/experts/Caught-in-Debt-of-of-PMRY-LOAN--91591.asp

However, PMRY loan is not a commercial loan but a Central Government sponsored scheme so the possibility of decree execution proceedings can not be initiated in the way it is generally initiated in case of commercial loans. I am providing some points in my favour.

(1) PMRY is an unsecured loan granted against the opportunity to get a Govt. job maintained with the employment exchanges.

(2) Objective of the Central Government to sponsor PMRY loans is to assist educated unemployed youths registered with the employment exchanges to secure a moderate means of livelihood as per the directive principles mentioned in the Constitution so that fundamental rights of such youths are secured.

(3) Once a person secures PMRY loan he/she losses the opportunity to get a government job maintained by the employment exchanges so in a way he/she providing his opportunity to get a Govt. job as security for the PMRY loans.

(4) The projects of PMRY are prescribed projects by the Central Government and since a borrower is not furnishing it (project) entirely of his own so the responsibility of execution of such projects can not be fully burdened on a borrower of PMRY loan.

(5) PMRY loans are 25% subsidized projects by the Central Govt. and also banks secures it from the credit guarantee commission for which premium is taken from a borrower, in way of adjustment of said 25% Govt. subsidy.

(6) Most PMRY projects are under financed and an under finance is not a finance.

(*) There are several such examples those will support my understanding  about possibility of not-so-stringent punitive measures taken  against a PMRY borrower by the financing banks.

 

 
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Entrepreneur

Besides the PMRY is a bi-lateral agreement. So the Central Govt. nedds to be a party in case of decree execution proceedings !

 
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SR. ADVOCATE

Dear Members:

The PMRJ is envisaged for the purpose of creating job opportunities for the weeker sections of the society.  The aim is to generate employment and self reliance and for that the government is spending considerable amount of  money.  The Banks are given quotas and target for disbursal of the loan.  Since the programme is govt. sponsored and partially aided by the govt. the Banks are disbursing the loan as recommended by the agency of the respective governments. Many a time though the Banks are reluctant  to entertain all applications by seeing their creditials but due to govt. pressure they have to clear off the file.  The receipient of the loan is happy to receive the amount as a bonanza as he has no knowledge of business rather to apply the money for a  gainful business.  He often spends the money for personal use and ultimately will become a defaulter and come to the street swunging his hands and say that he is not able to pay.  Now on whom you will fix the responsibility. the Govt., the Borrower, the Financier or the Scheme itself.

Now looking to the reality the financier is not party to the Scheme.  They advance loan for earning interest.  They may take security or may not take security. They may try to recover the dues.  In some cases they are sucessful and in some cases they have to create NPAs. These accounts are written off subsequently making losses to the public who are stake holders of the financier.  This loan is not a previlaged loan.  There is a Loan agreement where it is not mentioned that the borrower can become a defaulter and the amount can be recovered from the govt.  When you signed the document you are bound by it. They initiate legal action against you and avail all legal remedies including attachment of your personal properties and disposing the same without much difficulty as per the securitation law. 

Thanks

AAR. KRISHNAN

 
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Advocates & Mediators.

Hello friends

Has the borrower had given any securitys against rules ?

What is the loan amount availed and what is outstanding? what is total amount he paid?

Bank may verfy this before going for any dialogue


Total likes : 1 times

 
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Entrepreneur

In reply to AA RAMAKRISHNAN SR. ADVOCATE Statement.

"The PMRJ (PMRY?) is envisaged for the purpose of creating job opportunities for the weeker (weaker?) sections of the society...."

Above quoted statement is understandable. However, without going through the fact how can I agree with the following quoted statement? One needs to find out and establish the fact that the recipient of the loan has spent the money for his personal use, without establishing the fact, it can not be proper for one to interpret the following quoted statement. If mismanagement or lack of expertise or knowledge is a case for the failure of such business, subsequently sickness of the same and wastage of the borrowed money then is it proper to interpret that the such recipient of the loan has spent the money for personal use? I do not think so. Reasonably I believe that successful execution of such projects is not only the responsibility of such borrowers, rather such responsibility more rest on the shoulders on the monitoring agency including the financiers. Prejudicial, I can not really blame a weaker borrower for the faults of others. The objective of the PMRY is to  creating job opportunities for the weaker sections of the society but not only to mark them (the weaker sections) as habitual spenders of borrowed business money for their personal use – it is not the objective.

"The recipient of the loan is happy to receive the amount as a bonanza as he has no knowledge of business rather to apply the money for a  gainful business.  He often spends the money for personal use and ultimately will become a defaulter and come to the street swunging (swigging?) his hands and say that he is not able to pay."

 

 
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Entrepreneur

In response to Palukuru Satyanaryana, Advocate's Question.

"No, in case of PMRY, there is no concept of securities, the maximum loan amount can be less than equals to Rs. 1 lakh, in most cases they are under financed. The borrower said, "paid some interest to the bank" but the actual figure is not known to me. "

 
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