Government Doubles Loan Limit Under Pradhan Mantri Mudra Yojana to ₹20 Lakh
The Indian government has announced a significant increase in the loan limit under the Pradhan Mantri Mudra Yojana (PMMY), doubling it from ₹10 lakh to ₹20 lakh to foster entrepreneurship across the nation. This decision aims to further the Mudra Scheme’s core objective of financing those who previously lacked access to funds, as stated by the finance ministry on Friday.
A formal notification regarding this change was issued on Thursday, following Finance Minister Nirmala Sitharaman’s announcement during the Union Budget presentation on July 23, 2024. She emphasized that the enhanced limit will specifically benefit entrepreneurs who have successfully repaid loans previously taken under the ‘Tarun category.’
To support the growth and expansion of emerging entrepreneurs, a new category named ‘Tarun Plus’ has been introduced for loans exceeding ₹10 lakh and up to ₹20 lakh. This initiative aligns with the government’s goal of creating a vibrant entrepreneurial ecosystem in the country.
Furthermore, the Credit Guarantee Fund for Micro Units (CGFMU) will provide guarantee coverage for PMMY loans up to ₹20 lakh. Launched on April 8, 2015, by Prime Minister Narendra Modi, the PMMY aims to facilitate easy access to collateral-free micro-credit, primarily targeting non-corporate, non-farm small and micro-entrepreneurs for income-generating ventures.
Loans under the PMMY are disbursed by various Member Lending Institutions (MLIs), including banks, Non-Banking Financial Companies (NBFCs), Microfinance Institutions (MFIs), and other financial intermediaries. The existing scheme categorizes loans into three tiers: Shishu (up to ₹50,000), Kishore (between ₹50,000 and ₹5 lakh), and Tarun (up to ₹10 lakh).
