Following the budget announcement by Finance Minister Nirmala Sitharaman during the Union Budget 2024, the Finance Ministry increased the loan limit under the Mudra Scheme to Rs 20 lakhs from Rs 10 lakh earlier. The Department of Financial Services (DFS) of the Finance Ministry has also created a new ‘Tarun Plus’ category under the Mudra Scheme to encourage entrepreneurship in the country.
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Under the new category, loans above Rs 10 lakhs up to Rs 20 lakhs would be offered for entrepreneurs who have repaid their Tarun Loans. The guarantee coverage of PMMY loans up to Rs 20 lakh will be provided under the Credit Guarantee Fund for Micro Units (CGFMU).
“This increase aspires to further the overall objective of the Mudra Scheme which is Funding the Unfunded. This enhancement is specifically beneficial to upcoming entrepreneurs facilitating their growth and expansion. The move is in alignment with the Government’s commitment in fostering a robust entrepreneurial ecosystem,” the Finance Ministry said in a notification.
Pradhan Mantri MUDRA Yojana
The Pradhan Mantri MUDRA Yojana (PMMY) was launched on April 8, 2015, by Prime Minister Narendra Modi in order to facilitate easy collateral-free microcredit of up to ₹10 lakh to non-corporate, non-farm small and micro-entrepreneurs for income-generating activities.
Loans under PMMY are provided by Member Lending Institutions (MLIs) such as banks, non-banking financial companies (NBFCs), microfinance institutions (MFIs), and other financial intermediaries.
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During the interim budget presentation earlier this year, the government revealed that 43 crore loans amounting to Rs 22.5 lakh crore have been extended under the PM Mudra Yojana.
Under the umbrella of Pradhan Mantri MUDRA Yojana (PMMY), MUDRA has introduced various products or schemes. These schemes have been categorized as ‘Shishu’, ‘Kishor’, ‘Tarun’, and now ‘Tarun Plus’ to indicate the growth stage and funding requirements of the beneficiary micro unit or entrepreneur, as well as to serve as a benchmark for their progression and expansion.
a. Shishu: covering loans up to 50,000/-
b. Kishor: covering loans above 50,000/- and upto 5 lakh
c. Tarun: covering loans above 5 lakh to 10 lakh
MUDRA’s delivery channel is conceived to be through the refinance route, primarily to banks/NBFCs/MFIs.
FAQs on Pradhan Mantri MUDRA Yojana
1. What is MUDRA?
MUDRA, short for Micro Units Development & Refinance Agency Ltd., is a financial institution established by the Government of India to support and finance micro-enterprises. Its primary objective is to offer financial assistance to non-corporate small businesses through a network of Last-Mile Financial Institutions such as Banks, NBFCs, and MFIs.
2. Role and Responsibility of MUDRA
MUDRA will oversee the refinance of all Last Mile Financiers, including Non-Banking Finance Companies, Micro Finance Institutions, Societies, Trusts, Section 8 Companies (formerly Section 25), Small Finance Banks, and Regional Rural Banks that lend to micro/small business entities involved in manufacturing, trading, services, and agri-allied activities. Additionally, MUDRA will collaborate with State/Regional financial intermediaries to offer financial support to Last Mile Financiers of small/micro business enterprises.
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3. What is the rate of interest charged by MUDRA?
MUDRA serves as a refinance provider, offering its funds to Last Mile Financiers in order to facilitate their access to the market. MUDRA’s distinctive customer value proposition lies in providing affordable finance options with efficient pricing. The agency employs a range of innovative financing methods, including technology, to reduce the funding costs for borrowers.
4. What is the scope of PMMY?
The Pradhan Mantri Mudra Yojana (PMMY) loans will be offered by various financial institutions including Public Sector Banks (PSU banks), Regional Rural Banks (RRBs), Small Finance Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions, and Non-Banking Finance Companies. Any loans approved on or after April 08, 2015, with a maximum amount of 10 lakh for activities that generate non-farm income will be designated as PMMY loans.
5. Who will oversee the implementation of MUDRA loans?
Monitoring of PMMY progress will be conducted at the State level through the SLBC forum, and at the National level by MUDRA/Department of Financial Services, Government of India. MUDRA has created a portal for this purpose, where Banks and other lending institutions can input their achievement details directly. The system then consolidates this information and generates reports for review.
6. What is the eligibility for availing MUDRA loans?
Indian citizens with a business plan for a non-farm income generating activity, such as manufacturing, processing, trading, or service sector, are eligible to apply for MUDRA loans under the Pradhan Mantri Mudra Yojana (PMMY).
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