CURRENT AFFAIRS
CURRENT AFFAIRS
Description
The government has increased the maximum for Mudra loans under the Pradhan Mantri Mudra Yojana (PMMY) from Rs 10 lakh to Rs 20 lakh, adding a new 'Tarun Plus' category. This reform, announced by Finance Minister Nirmala Sitharaman in her July 2024 Budget statement, is intended to encourage entrepreneurship and assist new business owners. The increase is intended to empower aspiring entrepreneurs who have successfully returned previous loans under the existing Tarun category, so demonstrating the government's commitment to "Funding the Unfunded."
Key Details Of The Announcement
Enhanced Loan Limits- The new 'Tarun Plus' category allows loans of up to Rs 20 lakh, providing critical capital for business expansion.
Historical Context- PMMY, which launched on April 8, 2015, initially granted loans of up to Rs 10 lakh to non-corporate, non-farm small and micro-entrepreneurs, allowing for quick, collateral-free credit access.
Loan Categories- The initiative has three existing categories: Shishu (up to Rs 50,000), Kishore (between Rs 50,000 and Rs 5 lakh), and Tarun (up to Rs 10 lakh).
Impact On The Entrepreneurial Ecosystem
Loan Sanctions- In 2023-24, 66.8 million loans totaling Rs 5.4 trillion were approved under PMMY. Since its start, more than 487.8 million loans worth Rs 29.79 trillion have been authorized.
Non-Performing Assets- Public sector banks' NPA for Mudra loans fell to 3.4% in FY24, down from 4.77% in 2020-21, demonstrating better loan recovery rates.
Guarantee Coverage- Under the new category, loans up to Rs 20 lakh will be guaranteed by the Credit Guarantee Fund for Micro Units (CGFMU), providing further support to small firms.
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