New Category Added to Mudra Yojana: Discover the Updated Loan Limit

The government has raised the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) to Rs 20 lakh to encourage entrepreneurship across India. 

This increase aims to support the main goal of the Mudra Scheme—funding small, unserved businesses, according to a finance ministry statement on Friday. A notification confirming this change was issued on Thursday.

PMMY Loan Limit Increased

As Finance Minister Nirmala Sitharaman announced in the Union Budget 2024-25 on July 23, 2024, the loan limit under PMMY has been increased from Rs 10 lakh to Rs 20 lakh. 

Sitharaman stated that this higher limit would apply to entrepreneurs in the 'Tarun category' who have previously taken Mudra loans and repaid them successfully.

Good News for New Business Owners

This increase in the loan limit is particularly beneficial for new business owners, helping them grow and develop. It aligns with the government’s goal of creating a supportive environment for entrepreneurship.

According to the recent notification, entrepreneurs who have previously taken and fully repaid loans under the Tarun category can now apply for the new Tarun Plus category. This allows loans above Rs 10 lakh and up to Rs 20 lakh.

PMMY credit guarantees up to Rs 20 lakh will be offered under the Credit Guarantee Fund for Micro Units (CGFMU).

When was PMMY Launched?

Launched by Prime Minister Narendra Modi on April 8, 2015, the Pradhan Mantri Mudra Yojana (PMMY) aims to provide small and micro-entrepreneurs with accessible, collateral-free loans up to Rs 10 lakh for income-generating activities in non-corporate, non-farm sectors.

Loans under Pradhan Mantri Mudra Yojana are offered by Member Lending Institutions (MLIs) including banks, Non-Banking Financial Companies (NBFCs), Microfinance Institutions (MFIs), and other financial intermediaries.

According to the current plan, banks offer three types of collateral-free loans up to Rs 10 lakh: Shishu (up to Rs 50,000), Kishore (between Rs 50,000 and Rs 5 lakh), and Tarun (up to Rs 10 lakh).