The Indian government has announced an increase in the loan limit under the Pradhan Mantri Mudra Yojana (PMMY), raising it from Rs 10 lakh to Rs 20 lakh to better support aspiring entrepreneurs. This notification was issued on Thursday as part of the government's ongoing initiative to "fund the unfunded" and provide enhanced financial assistance to small businesses across the nation.

Finance Minister Nirmala Sitharaman introduced this increase during the Union Budget presentation for 2024-25 on July 23, 2024. The decision aims to improve access to credit for micro and small enterprises, fostering an entrepreneurial culture and aiding job creation, particularly in rural and underserved areas.

Sitharaman stated, "The limit of Mudra loans will be enhanced to Rs 20 lakh from the current Rs 10 lakh for entrepreneurs who have successfully repaid previous loans under the 'Tarun category'." This enhancement is specifically designed to assist emerging entrepreneurs in their growth and expansion, aligning with the government’s commitment to creating a robust entrepreneurial ecosystem.

Eligibility Criteria

The new 'Tarun Plus' category, which applies to loans above Rs 10 lakh and up to Rs 20 lakh, will be available to entrepreneurs who have successfully repaid earlier loans under the Tarun category. Additionally, the Credit Guarantee Fund for Micro Units (CGFMU) will provide guarantee coverage for PMMY loans up to Rs 20 lakh.

Overview of Pradhan Mantri Mudra Yojana

Launched on April 8, 2015, by Prime Minister Narendra Modi, the Pradhan Mantri Mudra Yojana aims to facilitate easy collateral-free micro-credit of up to Rs 10 lakh for non-corporate, non-farm small and micro-entrepreneurs engaged in income-generating activities. Loans under the PMMY are disbursed by Member Lending Institutions (MLIs), including banks, Non-Banking Financial Companies (NBFCs), Microfinance Institutions (MFIs), and other financial intermediaries. The scheme categorizes loans into three groups: Shishu (up to Rs 50,000), Kishore (between Rs 50,000 and Rs 5 lakh), and Tarun (up to Rs 10 lakh).

This recent decision reflects the government's ongoing efforts to empower small businesses and promote economic growth throughout the country.