The limit of Mudra loans under the Pradhan Mantri Mudra Yojana has been enhanced from the existing Rs 10 lakh to Rs 20 lakh, the Finance Minister Nirmala Sitharaman announced in the Union Budget 2024-25, a statement said on Friday.
The Mudra Scheme created a new category called 'Tarun Plus' so that loans between Rs 10 lakh and Rs 20 lakh can also be provided to the entrepreneurs, who have undertaken and cleared previous loans under the Tarun category.
The Department of Financial Services, on the microblogging site X, added, "Good news for small business owners! Guarantee coverage for #PMMY loans up to Rs 20 lakh will now be under the Credit Guarantee Fund for Micro Units (CGFMU). Supporting dreams, one step at a time.".
Sharing information on the increased loan limit, a notification put forth by Joint Secretary Prashant Kumar Goyal said, "The Fund shall provide cover for micro loans of up to such specified amount (of currently Rs 20 lakh) advanced by Member Lending Institution(s) to an eligible borrower, with such lending institution applying for guarantee cover in respect of such loans so sanctioned within such time period and as per procedures prescribed by the fund for the purpose."
"Furthermore, overdraft loan amount of Rs 10,000 sanctioned under PMJDY accounts shall also be eligible to be covered under Credit Guarantee Fund. It may be noted that micro loans under PMMY inclusive of overdraft under PMJDY, sanctioned since April 8, 2015 would qualify for guarantee cover under the scheme," it said.
It said the increase in the loan limit aims to further the overall objective of the Mudra Scheme funding the unfunded.
"This enhancement is specifically useful to emerging entrepreneurs who help facilitate their growth and expansion. The move comes in perfect accord with the government's commitment to fostering a robust entrepreneurial ecosystem," added the statement.
With a view to further supporting the development and financing of micro loans, MUDRA Ltd. has already been established under the umbrella of PMMY.
The schematic interventions of MUDRA Ltd. have been named 'Shishu', 'Kishor', 'Tarun', and 'Tarun Plus' to denote the stage of growth/development and funding needs of the beneficiary micro-unit/entrepreneur and also to serve as a reference point for the next phase of graduation/growth.
They are currently classified as Shishu, for loans up to Rs 50,000; Kishor, for loans above Rs 50,000 and up to Rs 5 lakh; Tarun for loans above Rs 5 lakh and up to Rs 10 lakh; and Tarun Plus, for loans above Rs 10 lakh and up to Rs 20 lakh for entrepreneurs who have exercised and paid back prior loans successfully under the 'Tarun' category.
Read also| PM Modi Invites German Business Delegation to Join India's Growth Story
Read also| Essential Insurance Policies Every Small Business Owner Should Have in 2024
