The Government of India has doubled the maximum loan limit under the Pradhan Mantri Mudra Yojana (PMMY) from Rs 10 lakh to Rs 20 lakh. This announcement was made by Finance Minister Nirmala Sitharaman during the Union Budget speech for 2024-25 in July. The introduction of the new ‘Tarun Plus’ category aims to further support budding entrepreneurs and strengthen India’s entrepreneurial ecosystem.
Mudra Loan Limit to Rs 20 Lakh Key Highlights
- Enhanced Loan Limit: The newly introduced ‘Tarun Plus’ category offers loans up to Rs 20 lakh, providing crucial funding for business expansion. This step builds on the existing categories and supports those who have successfully repaid previous loans.
- PMMY Overview: The Mudra scheme was launched on April 8, 2015, to provide collateral-free loans to small and micro-businesses in non-farm sectors. It aims to make credit accessible to all entrepreneurs, especially those underserved by traditional banking.
- Government Support: The scheme supports a wide range of income-generating activities across various sectors, including manufacturing, trade, agriculture-allied activities, and services.
- Loan Sanctions: In FY 2023-24, a total of 66.8 million loans amounting to Rs 5.4 trillion were sanctioned under PMMY. Since its inception, the scheme has facilitated over 487.8 million loans worth Rs 29.79 trillion.
- Improved Loan Recovery: The Non-Performing Assets (NPA) rate for Mudra loans has decreased from 4.77% in 2020-21 to 3.4% in FY24, reflecting better loan recovery and effective management.
Mudra Loan Categories
The Pradhan Mantri Mudra Yojana has three existing loan categories:
| Category | Loan Amount |
| Shishu | Up to Rs 50,000 |
| Kishore | Rs 50,001 to Rs 5 lakh |
| Tarun | Rs 5 lakh to Rs 10 lakh |
| Tarun Plus | Rs 10 lakh to Rs 20 lakh |
Related Event: National MSME Growth
The introduction of Tarun Plus aligns with India’s broader vision of supporting Micro, Small, and Medium Enterprises (MSMEs) to promote job creation and economic growth. This initiative will likely help achieve the government’s goal of “Funding the Unfunded.”
Mudra Loan Limit to Rs 20 Lakh Summary
- Doubling Loan Limit: The loan limit under PMMY has been raised from Rs 10 lakh to Rs 20 lakh.
- New Category: A new ‘Tarun Plus’ category has been introduced for loans between Rs 10 lakh and Rs 20 lakh.
- Support for Entrepreneurs: The scheme aims to provide financial aid to small businesses, fostering growth and entrepreneurship.
- Strong Loan Recovery: Reduced NPA rates indicate improved financial health and loan recovery.
- Over 487.8 Million Loans: Since 2015, PMMY has sanctioned over 487.8 million loans totaling Rs 29.79 trillion.
Also Read Latest Current Affairs 2024
The maximum loan limit under the Pradhan Mantri Mudra Yojana has been increased to Rs 20 lakh.
Tarun Plus is a new category under PMMY that offers loans from Rs 10 lakh to Rs 20 lakh for entrepreneurs who have successfully repaid previous loans.
The scheme provides collateral-free loans, helping small businesses access financial support for growth and expansion.
By offering easy and accessible credit, the scheme encourages entrepreneurship, particularly among underserved business owners.
The Pradhan Mantri Mudra Yojana was launched on April 8, 2015.
The three existing categories are Shishu (up to Rs 50,000), Kishore (Rs 50,001 to Rs 5 lakh), and Tarun (up to Rs 10 lakh).
The NPA rate has improved, decreasing from 4.77% in 2020-21 to 3.4% in FY24, indicating better loan recovery.
