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

• This increase aspires to further the overall objective of the Mudra Scheme which is funding the unfunded, the Finance Ministry said in a statement. A notification in this regard was issued on Thursday.

Highlights:

• The Indian government has increased the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) from ₹10 lakh to ₹20 lakh to foster entrepreneurship across the country. This change aligns with the Mudra Scheme's objective of “funding the unfunded,” as stated by the Finance Ministry. The Finance Minister, Nirmala Sitharaman, first announced this enhancement in the Union Budget for 2024-25.

Focus on Supporting Established Entrepreneurs:

• The revised loan cap targets entrepreneurs who have previously taken loans under the ‘Tarun’ category and successfully repaid them. This increase is expected to further support growth and expansion opportunities for budding entrepreneurs, strengthening India’s entrepreneurial ecosystem.

Introduction of the Tarun Plus Category:

• The notification introduces a new “Tarun Plus” category for loans above ₹10 lakh and up to ₹20 lakh, specifically for entrepreneurs who have demonstrated creditworthiness by repaying previous loans.

Enhanced Loan Security under CGFMU:

• The PMMY loans of up to ₹20 lakh will receive guarantee coverage under the Credit Guarantee Fund for Micro Units (CGFMU), which aims to mitigate lender risk and facilitate access to credit for small businesses.

Prelims Takeaways:

• Credit Guarantee Fund for Micro Units (CGFMU)
• Mudra Scheme