In a bid to further support budding entrepreneurs, the Indian government has raised the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) from Rs 10 lakh to Rs 20 lakh. A notification in this regard was issued on Thursday. The decision aims to drive the programme’s mission of “funding the unfunded” and provide greater financial assistance to small businesses across the country.
Announced by Finance Minister Nirmala Sitharaman in the Union Budget for 2024-25 on July 23, 2024, this increase is part of the government’s ongoing efforts to enhance access to credit for micro and small enterprises. On Friday, The Finance Ministry emphasised that this move is designed to foster an entrepreneurial culture and support job creation, especially in rural and underserved regions.
“The limit of Mudra loans will be enhanced to Rs 20 lakh from the current Rs 10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun category’, Sitharaman said while presenting the Budget in the Lok Sabha.
This enhancement is specifically beneficial to upcoming entrepreneurs facilitating their growth and expansion. The move is in alignment with the government’s commitment in fostering a robust entrepreneurial ecosystem.
As per the notification issued in this regard, the new category of ‘Tarun Plus’ is for loans above Rs 10 lakh and up to Rs 20 lakh and would be available to the entrepreneurs who have availed and successfully repaid previous loans under the Tarun category. The guarantee coverage of PMMY loans up to Rs 20 lakh will be provided under the Credit Guarantee Fund for Micro Units (CGFMU).
Pradhan Mantri Mudra Yojana was launched on April 8, 2015, by Prime Minister Narendra Modi to facilitate easy collateral-free micro-credit of up to Rs 10 lakh to non-corporate, non-farm small and micro-entrepreneurs for income-generating activities.
Loans under PMMY are provided by Member Lending Institutions (MLIs) banks, Non-banking Financial Companies (NBFCs), Microfinance Institutions (MFIs), and other financial intermediaries. As per the existing scheme, banks provide collateral-free loans up to Rs 10 lakh under three categories — Shishu (up to Rs 50,000), Kishore (between Rs 50,000 and Rs 5 lakh) and Tarun (Rs 10 lakh).
