Govt. doubles loan limit under Mudra Yojana to ₹20 lakh

Sub : Schemes

Sec: Eco

Context:

The government has doubled the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) from ₹10 lakh to ₹20 lakh.
This initiative is part of the government’s broader strategy to foster a robust entrepreneurial ecosystem, facilitating growth and expansion for emerging entrepreneurs.

New Tarun Plus Category:

A new category called Tarun Plus has been introduced for loans above ₹10 lakh and up to ₹20 lakhs.
The enhanced loan limit is specifically available to entrepreneurs who have successfully availed and repaid loans under the Tarun category, which allows loans up to ₹10 lakh.

Pradhan Mantri Mudra Yojana (PMMY):

The Pradhan Mantri MUDRA Yojana (PMMY) was launched in 2015, with the aim to facilitate easy collateral-free micro credit of up to ₹10 lakh to non-corporate, non-farm small and micro entrepreneurs for income generating activities.
It aims to promote entrepreneurship by funding the unfunded.

Key Features:

Loan Categories:
- Shishu: Loans up to ₹50,000
- Kishore: Loans above ₹50,000 and up to ₹5 lakh
- Tarun: Loans above ₹5 lakh and up to ₹10 lakh
Loan Limit Enhancement: As of the 2024-25 budget, the loan limit for the Tarun category has been increased to ₹20 lakh for entrepreneurs who have successfully repaid previous loans.
Eligibility: Micro and small enterprises, individuals, and self-help groups (SHGs) engaged in non-farm activities.

Implementation:

The loans under PMMY are provided by Member Lending Institutions (MLIs),e., Banks, Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) and other financial intermediaries.

Credit Guarantee Coverage

Loans granted under the PMMY for amounts up to ₹20 lakh will have guarantee coverage provided under the Credit Guarantee Fund for Micro Units (CGFMU).
This coverage aims to reduce the risk for lenders and encourage them to support aspiring entrepreneurs.