Centre doubles Mudra loan ceiling to Rs 20 lakh under new category

Finance Minister Nirmala Sitharaman had made an announcement regarding this in her July 2024 Budget speech

The government on Friday doubled the limit of Mudra loan amount under the Pradhan Mantri Mudra Yojana (PMMY) to Rs 20 lakh from Rs 10 lakh under a new ‘Tarun Plus’ category to promote entrepreneurship in the country.

 

“The increase aims to further the objective of the Mudra Scheme, which is to fund the unfunded. This enhancement is specifically beneficial to emerging entrepreneurs, facilitating their growth and expansion. The move aligns with the government’s commitment to fostering a robust entrepreneurial ecosystem,” said the Finance Ministry in a press statement.

 

Finance Minister Nirmala Sitharaman announced the same in her July 2024 Union Budget speech, saying: “The limit of Mudra loans will be enhanced to Rs 20 lakh from the current Rs 10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun category’. ”

 

 

Launched on April 8, 2015, by Prime Minister Narendra Modi, PMMY aims to facilitate easy, collateral-free micro-credit of up to ₹10 lakh to non-corporate, non-farm small and micro-entrepreneurs for income-generating activities.

 

  Loans are provided by member lending institutions, including banks, non-banking financial companies, microfinance institutions, and other financial intermediaries.

 

Under the existing scheme, banks provide collateral-free loans under three categories: Shishu (up to Rs 50,000), Kishore (between Rs 50,000 and Rs 5 lakh), and Tarun (up to Rs 10 lakh).

 

According to government data, 66.8 million loans were sanctioned under PMMY in 2023-24, amounting to Rs 5.4 trillion. As of June 2024, more than 487.8 million loans totaling Rs 29.79 trillion have been sanctioned since the inception of the scheme.

 

Non-performing assets (NPA) of public sector banks in Mudra loans have decreased to 3.4 per cent in FY24, down from a high of 4.77 per cent in 2020-21, and 4.89 per cent in 2019-20, according to a statement by the Finance Minister presented in Lok Sabha in response to a query.

 

In contrast, the gross NPA of scheduled commercial banks in the country is 2.8 per cent as of March 2024.