Increase in limit of Mudra Loan Scheme

Why in news?

• The central government has increased the loan limit under the Pradhan Mantri Mudra Loan Yojana from Rs 10 lakh to Rs 20 lakh.

Key Points:

• This announcement was made by Finance Minister Nirmala Sitharaman in July as part of the Union Budget 2024-2025.
• According to the Department of Financial Services (DFS), a new 'Tarun Plus' category has been created under this scheme.
  • This category will provide loans to entrepreneurs from Rs 10 lakh to Rs 20 lakh.
  • Only those entrepreneurs will be eligible for this who have repaid the previous Tarun loans.
• This initiative reflects the government's ongoing commitment to promote a strong entrepreneurial ecosystem.

Pradhan Mantri Mudra Yojana (PMMY):

• This scheme was launched by the Government of India in the year 2015.
• It provides collateral-free institutional loans up to Rs 10 lakh to small business enterprises.
• It is provided by member lending institutions such as:
  • Scheduled Commercial Banks
  • Regional Rural Banks
  • Non-Banking Financial Companies
  • Microfinance Institutions
• This loan can be used for the following activities:
  • Manufacturing
  • Trading
  • Service Sector
  • Income-generating activity in agriculture
• Till now, 3 types of loans were given under it:
  • Shishu (loan up to Rs 50,000)
  • Kishor (loan between Rs 50,000 and Rs 5 lakh)
  • Tarun (loan between Rs 5 lakh and Rs 10 lakh)