BTL 778 - PM Vishwakarma Scheme and CGTMSE

 

The Banking Tutor’s Lessons

BTL 778                                                                             27-04-2025

PM Vishwakarma Scheme and CGTMSE

The Government of India launched the PM Vishwakarma Yojana on Vishwakarma Jayanti – September 17, 2023, with the vision to empower artisans and craftspeople across India. These individuals, often referred to as 'Vishwakarmas', are skilled in traditional crafts like blacksmithing, pottery, carpentry, weaving, etc. Recognizing their socio-economic contributions and the need for formal financial support, the CGTMSE has laid down clear guidelines to offer credit guarantees under the PM Vishwakarma scheme.

PM Vishwakarma Scheme targets artisans often excluded from formal credit due to lack of collateral. Providing collateral-free loans ensures they enter the mainstream banking system.

Guarantee support encourages banks to lend confidently to borrowers with informal credit histories.

Objective: Ensure artisans access affordable credit and skill development support, while banks remain protected via CGTMSE cover.

Eligible Borrowers under the Scheme

Registered beneficiaries under PM Vishwakarma Yojana (through biometric-based portal)

Engaged in 18 traditional trades (e.g. carpenter, goldsmith, cobbler, tailor, etc.)

Covered under Guru-Shishya tradition or family-based skill transfer system

Loan Details and Tranches

•    First Tranche: Up to ₹1 lakh

•    Second Tranche: Up to ₹2 lakh

•    Interest Rate: 5% (concessional)

CGTMSE Guarantee Structure

Guarantee Cover: 100% of sanctioned amount under PM Vishwakarma

Guarantee Fee: Waived (no AGF applicable)

Repayment Period: As per sanction terms (usually 18–36 months)

Impact for Banks:

•        No risk of credit loss due to default

•        No cost in the form of AGF

Bank’s Role and Responsibilities

Verify borrower’s registration under PM Vishwakarma

Upload loan details on CGTMSE portal within 30 days of disbursement

Monitor usage of funds and ensure timely repayments

No requirement to apply separately for CGTMSE – auto-cover is activated

Toolkit & Training Incentives Apart from credit, artisans receive:

•        ₹15,000 toolkit incentive

•        Skill training (basic and advanced)

•        Marketing and digital transaction support

Impact Analysis

For Bankers:

•        Zero-cost, zero-risk lending to underserved sectors

•        Opportunity to expand Priority Sector Lending (PSL)

•        Helps meet rural and financial inclusion targets

For Artisans:

•        Affordable working capital to revive traditional businesses

•        Enhanced dignity, documentation, and market access

•        Financial and digital literacy via government support

The PM Vishwakarma Yojana backed by CGTMSE is more than just a welfare scheme—it's a national mission to integrate skilled traditional artisans into India’s formal economy. With full guarantee coverage and no fees, it creates a win-win for both banks and borrowers.

For bankers, this is an excellent opportunity to expand quality credit without credit risk. For aspirants, expect exam questions around loan tranches, interest rate, AGF, and eligibility.

Arun

Axis Bank

+91 94500 79741