Pradhan Mantri MUDRA Yojana: 2 pct Interest Subvention approved on prompt repayment of Shishu Loans

The Union Cabinet chaired by Prime Minister Narendra Modi today approved a scheme for interest subvention of 2 per cent, to all Shishu loan accounts under Pradhan Mantri Mudra Yojana (PMMY) to eligible borrowers. The Prime Minister's Office (PMO) informed about the decision and said that the decision will be applicable for a period of 12 months. The move will not only incentivise the regular loan payment but help small businesses brace the disruption caused due to COVID-19.

Informing about the cabinet decision the PMO said, "The scheme will be extended to loans which meet the following criteria - outstanding as on 31st March, 2020; and not in Non-Performing Asset (NPA) category, as per Reserve Bank of India (RBI) guidelines, on 31st March 2020 and during the period of operation of the Scheme."

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The interest subvention would be payable for the months in which the accounts are not in NPA category including for the months that the account becomes a performing asset again, after turning NPA. The scheme will incentivize people who will make regular repayments of loans. The estimated cost of the Scheme would be approximately Rs 1,542 crore which would be provided by the Government of India.

In today's meeting, cabinet also approved Rs 15,000 cr infrastructure fund to promote dairy, poultry and meat processing, establishment of Animal Husbandry Infrastructure Development Fund where teh Modi Government will provide 3 per cent interest subvention to eligible beneficiaries. The Modi Govt also decided to bring 1,540 cooperative banks under RBI's supervision that will give an assurance to more than 8.6 crore depositors in these banks that their money amounting to Rs 4.84 lakh crore will stay safe.