The Centre has doubled the maximum limit of its Mudra loan scheme – the collateral free institutional credit to small businesses – to ₹20 lakh for a new category of scrupulous entrepreneurs called ‘Tarun Plus’ for those who availed the facility in past and repaid the borrowed sum, the Union finance ministry said on Friday.
“This enhancement is specifically beneficial to upcoming entrepreneurs facilitating their growth and expansion. The move is in alignment with the Government’s commitment to fostering a robust entrepreneurial ecosystem,” it said in a statement.
The move will also raise the categories of Mudra loans beneficiaries from three to four under the Pradhan Mantri Mudra Yojana (PMMY) that was launched by Prime Minister Narendra Modi on April 8, 2015.
Now the four categories are – ‘Shishu’ (covering loans up to ₹50,000), ‘Kishore’ (loans above ₹50,000 and up to ₹5 lakh), ‘Tarun’ (above ₹5 lakh and up to ₹10 lakh) and the new class of ‘Tarun Plus’ (above ₹10 lakh and up to ₹20 lakh). The various categories signify the stage of growth and funding needs of the beneficiary micro unit and also provide a reference point for the next phase of growth.
The present decision is in line with the budget announcement made by Union finance minister Nirmala Sitharaman on July 23, 2024.
“The limit of Mudra loans will be enhanced to ₹20 lakh from the current ₹10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category,” she said in her budget speech.
According to the government’s data, 6,67,77,013 loans were sanctioned under the PMMY scheme in 2023-24 alone, which amounted to ₹5,41,012.86 crore. The total disbursal during the period was ₹5,32,358.35 crore. As per data uploaded by MLIs on the Mudra portal, more than 48.78 crore loans amounting to ₹29.79 lakh crore have been sanctioned as of June 2024, since inception of the scheme.
“This increase aspires to further the overall objective of the Mudra Scheme which is Funding the Unfunded,” the finance ministry said in the statement. The guaranteed coverage of PMMY loans up to ₹20 lakh are provided under the Credit Guarantee Fund for Micro Units (CGFMU). Loans are provided by member lending institutions (MLIs) such as scheduled commercial banks (SCBs), non- banking financial companies (NBFCs) and micro finance institutions (MFIs).
Eligible borrowers are new or existing micro units or enterprises, according to the scheme.
“Eligible borrower would also mean Self Help Groups (SHGs) who meet eligibility criteria prescribed by the Fund and whose loan amount is above ₹10 lakh and up to ₹20 lakh,” it said.
“Any individual, who is otherwise eligible to take a loan and has a business plan for small business enterprise can avail loan under the scheme for income generating activities in the manufacturing, trading, service sectors and also for activities allied to agriculture across three loan categories,” a finance ministry official said.