The Ministry of Finance has officially announced an increase in the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) from Rs. 10 lakh to Rs. 20 lakh, as part of the Union Budget 2024-25 announced on July 23, 2024. This change aims to support emerging entrepreneurs in their growth and expansion efforts, aligning with the government’s objective of enhancing the entrepreneurial ecosystem in India. The new loan category, named “Tarun Plus,” will cater to loans ranging from Rs. 10 lakh to Rs. 20 lakh, specifically for those who have successfully repaid previous loans under the Tarun category. The Credit Guarantee Fund for Micro Units (CGFMU) will provide guarantee coverage for these loans. Additionally, the scheme’s parameters have been updated to include various categories of micro loans: Shishu (up to Rs. 50,000), Kishor (above Rs. 50,000 to Rs. 5 lakh), Tarun (above Rs. 5 lakh to Rs. 10 lakh), and the new Tarun Plus category. The modifications also clarify that eligible borrowers include new or existing micro enterprises, Self Help Groups, and other entities defined under the MSMED Act, with loans up to Rs. 20 lakh now qualifying for guarantee coverage under the scheme. This revised notification will take effect from October 24, 2024.
Ministry of Finance
Loan limit under Pradhan Mantri Mudra Yojana (PMMY) increased to Rs.20 lakh from the current Rs.10 lakh
Posted On: 25 OCT 2024 12:36PM by PIB Delhi
As announced by the Finance Minister on 23rd July, 2024 in the Union Budget 2024-25, the limit of Mudra loans under the Pradhan Mantri Mudra Yojana (PMMY) has been enhanced from current Rs. 10 lakh to Rs. 20 lakh. This increase aspires to further the overall objective of the Mudra Scheme which is Funding the Unfunded. This enhancement is specifically beneficial to upcoming entrepreneurs facilitating their growth and expansion. The move is in alignment with the Governmment’s commitment in fostering a robust entrepreneurial ecosystem.
As per the notification issued in this regard, the new category of Tarun Plus is for Loans above Rs. 10 lakh and upto Rs. 20 lakh and would be available to the entrepreneurs who have availed and successfully repaid previous loans under the Tarun category. The guarantee coverage of PMMY loans upto Rs. 20 lakh will be provided under the Credit Guarantee Fund for Micro Units (CGFMU).
MINISTRY OF FINANCE
(Department of Financial Services)
NOTIFICATION
New Delhi, the 24th October, 2024
S.O. 4658(E).—In partial modification of MINISTRY OF FINANCE (Department of Financial Services), New Delhi NOTIFICATIONS S.O. 1443(E) dated 18th April, 2016, S.O. 1261(E) dated 16th April, 2020, S.O. 2668(E) dated 01st July, 2021, S.O. 457(E) dated 31st January, 2023 and S.O. 1361(E) dated 21st March, 2023 appearing in the Gazette of India: EXTRAORDINARY PART II – Section 3 – Sub-section (ii) publishing the Scheme of Credit Guarantee Fund for Micro Units (CGFMU) (hereinafter referred to as the said Scheme), the Central Government hereby makes the following amendments to the Scheme, namely :-
1. Paragraph 2 (xi) of Chapter I of Notification number S.O. 1443(E) dated 18th April, 2016 has been modified and shall read as:
“Micro Loan” means any financial assistance by way of collateral free/third party guarantee free loan/limit (currently Rs.20 lakh), extended by the lending institution to the eligible borrower, as per the guidelines prescribed by the Fund. Under the aegis of Pradhan Mantri MUDRA Yojana, MUDRA Ltd. has already been created to support development and financing of micro loans. The schematic interventions of MUDRA Ltd. have been named ‘Shishu’, ‘Kishor’ ‘Tarun’ and ‘Tarun Plus’ to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth. They are presently defined as under:
- Shishu: covering loans upto 50,000/-
- Kishor: covering loans above 50,000/- and upto 5 lakh
- Tarun: covering loans above 5 lakh and upto 10 lakh
- Tarun Plus: covering loans above 10 lakh and upto 20 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.
Further, Overdraft facility of Rs.10,000/- sanctioned under PMJDY accounts shall also be eligible to be covered under Credit guarantee Fund.
2. Paragraph 2 (xii) of Chapter I Notification S.O. 1443(E) dated on 18th April, 2016 has been modified and shall read as:
“Eligible borrower” means new or existing micro unit / enterprise, including micro unit/enterprise set up under Joint Liability Group (JLG) framework, individually or jointly (irrespective of the availability of guarantee under JLG), falling under any sector covered under PMMY or as defined in the MSMED Act, 2006 (as amended from time to time), who meets eligibility criteria prescribed by the Fund and whose credit requirement does not exceed the specified limit under PMMY. Specified limit of the loan shall be Rs.20 lakh as defined above or such other amount as may be decided by the Fund from time to time. Further, Overdraft loan amount of Rs.10,000/- sanctioned under PMJDY accounts shall also be eligible to be covered under Credit guarantee Fund. Eligible borrower would also mean Self Help Groups who meet eligibility criteria prescribed by the Fund and whose loan amount is above Rs.10 lakh and upto Rs.20 lakh.
3. Paragraph 4 of Chapter II of Notification number S.O. 1443(E) dated the 18th April, 2016, shall be read as:
The Fund shall cover micro loans upto the specified limit (currently Rs.20 lakh) extended by Member Lending Institution(s) to an eligible borrower, provided that the lending institution applies for guarantee cover in respect of such loans so sanctioned within such time period and as per procedures prescribed by the Fund for the purpose. Further, Overdraft loan amount of Rs.10,000/- sanctioned under PMJDY accounts shall also be eligible to be covered under Credit guarantee Fund.
It may be noted that micro loans under PMMY inclusive of overdraft under PMJDY, sanctioned since 8th April 2015 would qualify for guarantee cover under the scheme.
The Fund may, at its discretion, approve/frame a list of Member Lending Institutions and /or their schemes, for which the guarantee cover will be available, or a negative list for which the guarantee cover shall not be available.
4. All other terms and conditions of the earlier Notifications on the Scheme shall remain unchanged.
5. The Notification shall come into effect from 24.10.2024
[F. No. 6/12/2024 – Mission Office, DFS]
PARSHANT KUMAR GOYAL, Jt. Secy.
