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The Pradhan Mantri Mudra Yojana (PMMY) has increased its loan limit from Rs. 10 lakh to Rs. 20 lakh, as announced by the Finance Minister in the Union Budget 2024-25.

About Pradhan Mantri Mudra Yojana (PMMY) 

The scheme was launched by the Ministry of Finance in April 2015 to provide financial support to micro and small enterprises. 

The loans are provided by Lending Institutions (MLIs) such as Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks, Non-Banking Financial Companies (NBFCs), and Micro Finance Institutions (MFIs)

It aims to "fund the unfunded" by offering loans to non-corporate, non-farm small/micro enterprises. These loans are categorized into three segments: Shishu (up to Rs. 50,000), Kishore (Rs. 50,001 to Rs. 5 lakh), and Tarun (Rs. 5,00,001 to Rs. 10 lakh).

Recent change

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

With the increase in the loan limit, a new category called Tarun Plus has been introduced. This category is specifically for loans above Rs. 10 lakh and up to Rs. 20 lakh. 

Entrepreneurs who have previously availed and successfully repaid loans under the Tarun category are eligible for Tarun Plus loans. The loans can be used for business expansion, purchasing equipment, or other business-related expenses.

The guarantee coverage for PMMY loans up to Rs. 20 lakh will be provided under the Credit Guarantee Fund for Micro Units (CGFMU), it will ensure that the lending institutions are protected against default, thereby encouraging them to extend credit to micro and small enterprises.

Present Status of Pradhan Mantri Mudra Yojana (PMMY) As of March 24, 2023, about ₹23.2 lakh crore has been sanctioned in 40.82 crore loan accounts. Approximately 68% of accounts under the scheme belong to women entrepreneurs. About 51% of accounts belong to entrepreneurs from SC/ST and OBC categories. The scheme has contributed to the growth of MSMEs, supporting the "Make in India" program and generating large-scale employment opportunities at the grassroots level.

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PRACTICE QUESTION Q.In the context of the Pradhan Mantri Mudra Yojana (PMMY), consider the following statements: 1. It was launched by the Ministry of Corporate Affairs to provide financial support to micro, small, and medium enterprises (MSMEs). 2. Interest rates under PMMY are determined by the lending banks and financial institutions. Which of the above statements is/are correct? A) 1 only B) 2 only C) Both 1 and 2 D) Neither 1 nor 2  Answer: B Explanation: Statement 1 is incorrect: The Union Ministry of Finance in 2015 has launched the Pradhan Mantri Mudra Yojana (PMMY) to provide financial support to micro, small, and medium enterprises (MSMEs). Statement 2 is correct: Applicants can apply for loans through financial institutions such as banks, Non-Banking Financial Companies (NBFCs), and Micro Finance Institutions (MFIs) that are part of the PMMY scheme.  Interest rates under PMMY are decided by the lending banks and financial institutions, usually depending on the borrower's creditworthiness.