Following the budget announcement by Finance Minister Nirmala Sitharaman during the Union Budget 2024-25 on July 23, 2024, the Finance Ministry raised the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) from Rs 10 lakh to Rs 20 lakh. This adjustment, aimed at empowering small businesses, will specifically benefit upcoming entrepreneurs, aiding them in expanding their ventures.
The PMMY, launched by Prime Minister Narendra Modi on April 8, 2015, facilitates collateral-free micro-loans for non-corporate, non-farm small businesses. The scheme targets the Non-Corporate Small Business Sector (NCSBS), encompassing proprietorships and partnership firms involved in manufacturing, trading, services, and agriculture-allied activities like poultry and beekeeping. This initiative has served as a cornerstone for income generation and financial inclusion across diverse sectors, especially for rural and urban micro-entrepreneurs.
The revised PMMY structure introduces a new loan category, “Tarun Plus,” catering to amounts between Rs. 10 lakh and Rs. 20 lakh. This new tier is accessible to entrepreneurs who have successfully utilized and repaid prior loans under the existing "Tarun" category, which previously offered loans up to Rs. 10 lakh. Loan guarantees for amounts up to Rs. 20 lakh will be provided through the Credit Guarantee Fund for Micro Units (CGFMU), enhancing credit security for financial institutions and bolstering trust in the system.
Any Indian citizen with a viable plan for non-farm income-generating activities, like manufacturing, trading, or allied agriculture, can apply for the Pradhan Mantri Mudra Yojana (PMMY). Eligible applicants include individuals, sole proprietorships, partnerships, and private companies with credit needs up to Rs. 20 lakh.
The PMMY offers three key loan products to support businesses at various stages of growth: Shishu (loans up to Rs. 50,000 for startups), Kishore (Rs. 50,001 to Rs. 5 lakh for expanding businesses), and Tarun (Rs. 5 lakh to Rs. 10 lakh for established ventures). With the introduction of Tarun Plus, PMMY can now extend more substantial support to successful enterprises seeking further growth.
Loans under the PMMY are issued through Member Lending Institutions (MLIs) such as Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks, Non-Banking Financial Companies (NBFCs), and Micro Finance Institutions (MFIs). This wide network ensures the scheme reaches a diverse and broad beneficiary base, thus achieving the PMMY's aim of "Funding the Unfunded" and supporting India’s entrepreneurial ecosystem.
