Mudra Shishu loan announced for small businesses

The centre has announced the launch of ‘Mudra Shishu loan’ to benefit small businesses and cottage industries. Under the scheme, one lakh beneficiaries can avail an interest benefit of 2 percent for a year. 

Finance Minister Nirmala Sitharaman had announced the ‘Mudra Shishu loan’ while announcing the second tranche of the centre’s 20 lakh crore package to revive the Indian economy amid COVID-19 pandemic. 

Sitharaman had announced that all small businesses impacted by coronavirus will get 2 percent interest subvention on loans up to Rs 50,000 secured under the Mudra Shishu Loan. 

Key Highlights 

•  Under Mudra Shishu Loan, those who have availed loans up to Rs 50,000 will be given an interest subvention of 2% for the next 12 months after the moratorium period extended by RBI ends. 

•  The interest subvention will be provided to prompt payees for a period of 12 months.

•  The scheme is expected to provide the benefit of Rs 1500 crore to about 3 crore people. 

•  Three crore people will get the benefit of Rs 1500 crore. The step is aimed to prevent the suffering of shopkeepers, especially small businesses in the wake of COVID-19 pandemic. 

Significance

The move is aimed at helping small businesses, who won’t be able to make regular payments for the loans they have taken for the next few months. The businesses are already on the verge of shut down due to a lack of revenue and demand. 

Background

The Mudra Shishu loan was announced by Finance Minister Nirmala Sitharaman along with a slew of other measures aimed at reviving the Indian economy amid the crisis during the announcement of the Centre’s 20 lakh crore Atmanirbhar Bharat economic package.