The Indian finance ministry has announced an increase in the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) to ₹20 lakh, effective immediately. This decision was revealed by Finance Minister Nirmala Sitharaman during the Union Budget 2024-25 presentation on July 23, aiming to provide greater financial support to emerging entrepreneurs.
Introduction of Tarun Plus Loan Category
In a bid to assist established entrepreneurs, the government has introduced a new loan category called Tarun Plus, which is designed for loans exceeding ₹10 lakh and up to ₹20 lakh. This option is specifically available for those who have previously borrowed under the ‘Tarun’ category and successfully repaid their loans.
Strengthening the Credit Guarantee Fund
To further enhance the entrepreneurial ecosystem, loans up to ₹20 lakh will be supported by the Credit Guarantee Fund for Micro Units (CGFMU). This initiative underscores the government’s commitment to nurturing micro-enterprises and facilitating access to credit.
Key Features of the Credit Guarantee Fund
According to a notification from the Department of Financial Services, the fund will cover micro loans up to ₹20 lakh extended by lending institutions to eligible borrowers. To benefit from this coverage, lending institutions must apply for guarantee protection within the prescribed time frame and follow the outlined procedures.
Additionally, overdraft loan amounts of ₹10,000 sanctioned under Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts will also be eligible for coverage under the Credit Guarantee Fund. This move aims to enhance financial security for micro-entrepreneurs and bolster their growth prospects.
