Budget 2024: Double PM Mudra loan threshold of Rs 20 lakh a reality now

A higher threshold of Rs 20 lakh applicable to loans under the Pradhan Mantri Mudra Scheme announced in the Union Budget 2024 took effect on Friday, October 25. During her July 23 speech in Parliament, Finance Minister Nirmala Sitharaman had announced the decision to double the maximum loan amount in the 'Tarun' category under the scheme to Rs 20 lakh in a bid to promote entrepreneurship. Under Pradhan Mantri Mudra Yojana, the higher limit of Rs 20 lakh under the Tarun Plus category will be provided to entrepreneurs who have already serviced their loans under the Tarun category earlier, according to an official notification. 

Here are 10 things to know about this development and the Pradhan Mantri Mudra scheme: 

• "The limit of Mudra loans will be enhanced to Rs 20 lakh from the current Rs 10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category," the finance minister had announced on July 23. 
• The higher limit is "specifically beneficial to upcoming entrepreneurs facilitating their growth and expansion", according to the Finance Ministry.
• The PM Mudra scheme is aimed at "funding the unfunded" and supporting the country's startup ecosystem.
• Now, a guarantee coverage of up to Rs 20 lakh will be provided under the scheme instead of the existing Rs 10 lakh. 
• Until now, the central government provided financial assistance to small and micro enterprises (SMEs) in the non-farm sector through the PM Mudra scheme. 
• Loans availed under the scheme are meant for income-generating SMEs for funding activities such as manufacturing, trading, and services. 
• The loans are provided by banks, NBFCs, microfinance institutions (MFIs), and other member lending institutions. 
• Under the scheme, collateral-free loans are available in three categories:
  • Shishu: Up to Rs 50,000
  • Kishore: Rs 50,000 to Rs 5,00,000
  • Tarun: Rs 10 lakh
• Prime Minister Narendra Modi had launched the scheme in April 2015 to facilitate easy collateral-free micro-credit to non-corporate, non-farm SMEs for income-generating activities.
• The Mudra scheme extends financial support to income-generating SMEs in the non-farm sector without collateral under certain conditions.