Pradhan Mantri Mudra Yojana: Finance Minister Nirmala Sitharaman first revealed the decision in the Union Budget 2024–25, which was unveiled on July 23, 2024. The decision was publicly notified on Thursday.
In an effort to encourage entrepreneurship, the government has increased the Pradhan Mantri Mudra Yojana (PMMY) loan cap to Rs 20 lakh, the finance ministry announced. According to a ministry statement released on Friday, the hike is intended to provide financial support for small business owners nationwide.
Finance Minister Nirmala Sitharaman first revealed the decision in the Union Budget 2024-25, which was unveiled on July 23, 2024. It was formally declared on Thursday. The finance minister announced intentions to increase the Mudra loan cap from Rs 10 lakh to Rs 20 lakh, with a focus on business owners who have paid back prior loans under the Tarun category of the scheme.
Sitharaman stated in her Lok Sabha Budget address that “for those entrepreneurs who have accessed and successfully repaid previous loans under the ‘Tarun’ category, the limit of Mudra loans will be enhanced to Rs 20 lakh from the current Rs 10 lakh.”
The new loan category, called “Tarun Plus,” would help aspiring business owners grow their enterprises by covering loans up to Rs 20 lakh and over Rs 10 lakh. Under the updated PMMY plan, loans up to Rs 20 lakh would be guaranteed by the Credit Guarantee Fund for Micro Units (CGFMU).
Prime Minister Narendra Modi introduced PMMY in April 2015, offering non-corporate, non-farm small, and micro-entrepreneurs collateral-free microcredit to encourage revenue-generating ventures. Banks, Non-Banking Financial Companies (NBFCs), Microfinance Institutions (MFIs), and other financial intermediaries are examples of Member Lending Institutions (MLIs) that offer loans.
Based on the loan amount, loans are divided into three levels under the current PMMY framework: Tarun (up to Rs 10 lakh), Kishore (up to Rs 50,000), and Shishu (up to Rs 50,000). The government hopes to assist India’s small company sector in its next stage of expansion by introducing the Tarun Plus category.