Caught in Debt of of PMRY LOAN.

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

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

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

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 https://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.

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

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

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

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."

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. "

Hello sir

The Schemes aimed at generation of employement is to be strickly used for that pupose

and any delution on the part  of borrowers the bankers will be reluctuntant to sanction a loan .

A sincere viable proposals and a good intention to repay the loan coupled with good work and track of sinceretity in repayment will guard a borrower even if unit slips into losses.

Banks are main pillors for economy and mainly the nationalised banks are the main instruments for developement of rural india in the past 40 yrs in the sectors of Agri, transportation, allied activities. My request is use it as proper tiools for your and societys improvement please.

In response to Palukuru Satyanaryana, Advocate's statement/suggestion.

Dear Sir,

I have noticed your following quoted statement where somewhat I agree with your statement somewhat NOT.

I wish to mention that Article 38 (2) of our Constitution states, The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations. Article 39 (1) of our constitution says, The State shall, in particular, direct its policy towards securing that the citizen, men and women equally, have the right to an adequate means of livelihood. Article 41 states right to work, the State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want. The Constitutional machinery of the Union and the directive principles of the State policy are meant to achieve the objective of the Constitution. Although the Directive Principles of State Policy are asserted to be fundamental in the governance of the country, they are not legally enforceable. It shall be the duty of the State to apply these principles in making laws. Any indifference or negligence in the direction of implementation of the directive principles of the State policy is bound to be fatal to the very cause of the Constitution.
 
Therefore, in order to promote self-employment among educated unemployed youths in India, The PMRY has been designed. The objective of the PMRY is to assist and to provide employment to more than a million person by setting up of 7 lakhs micro enterprises by the educated unemployed young men and women in taking up economically viable projects financed by the commercial banks with a provision of 15% subsidy on sanctioned project cost, the cost of the project is limited upto Rs.1 lakh are covered under the scheme in case of individuals, Government of India would provide the subsidy subject to a ceiling of Rs.7500/- per entrepreneur. Entrepreneur is required to contribute 5 percent of project cost as margin money in cash. Balance 95 percent would be sanctioned as composite loan by Bank. The loans would not require any collateral guarantee. Only assets created under the Scheme would be hypothecated/mortgaged/pledged to the Bank. However, for sponsoring the beneficiaries the Government has formed screening Committees at the district and block levels while the Labour Departments is the nodal agency, principally responsible for co-coordinating and monitoring the financed projects. Scheme envisages compulsory training for entrepreneurs after the loan is sanctioned. However, to avail the benefit of the PMRY, an eligible person has to apply in a prescribed form to the Government Department concerned. The Screening Committee interviews the candidate sponsored by the Government and to decide the suitability of the candidate, viability and scope of successful implementation of the project and/or may suggest modification in it then they recommend the project to the appropriate financing bank through the Convener of the Committee indicating the project cost. The said Convener then forward a copy of the project to the financing bank.

Unfortunately, on spending a fairly high amount in preparing the project report and a prolonged delay in sanctioning and imparting training finally, when the financing bank disburse the project to a very young candidate after cross-examination, the cost of the project  over runs at the very beginning, in addition to that most of the recommended projects are further under-financed by the concerned banks.

Irrespective of the fact whether a project is under-financed or over-runs, the employment exchange registration of a candidate is removed from the live register and kept on a dormant register from the date of disbursement that practically remains dormant forever and never brought back to the Live Register, in the event of failure of the project the monitoring Committee will keep a blind eye to the reason of failure of such projects and the bank will delay to demand the outstanding loan amount from the candidate but deliberately force him/her to believe that he is a born looser. The crux of the matter lies elsewhere, The Govt. probably believes that it has fulfilled its responsibility towards its citizen by providing him/her an adequate means of livelihood.

Additionally, I wish to mention about an article published probably in the Asian Age News Paper in the year of 1997 with the title "The Prime Minister's Rozgar Yojana fails, bankers held responsible". This article pointed about many things -Overrunning of the PMRY projects even before it is started by a borrower and the latches on the part of the bankers.

Finally, I wish to mention, for the notice of all concerned, that before we express our own respective views about the instant issue, it is better that we read the book that stipulates about the PMRY - its objective, rules, process and all other relevant matters and findout whether they are properly implemented by the agency concerned, then only we can properly interpret all the pros and cons on the part of a PMRY loan borrower, not before that.

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.

Even if i agree with u also banker may not agree since Art 38 followed Art 37.

Have a dialogue with the banker for scaling down or for OTS since we have genuinely suffered loss

in the business.