In a major announcement aimed at boosting small businesses and self-employment in India, the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) has been increased from ₹10 lakh to ₹20 lakh. This strategic move by the central government is expected to benefit lakhs of micro and small-scale entrepreneurs across the country by making more credit available without the need for collateral.
What is the Mudra Yojana?
Launched in 2015 by Prime Minister Narendra Modi, the Mudra scheme provides collateral-free micro-credit to non-corporate, non-agricultural small and micro-businesses. Over the years, it has enabled millions to start or expand their businesses with easy loan accessibility through public sector banks, private banks, NBFCs, and microfinance institutions.
Four Loan Categories Under Mudra Yojana
The scheme now offers loans under four distinct categories, tailored to different business stages:
Shishu:
Loan up to ₹50,000
Designed for startups, hawkers, vendors, and very small business units beginning operations.Kishor:
Loan from ₹50,000 to ₹5 lakh
Suitable for slightly more established businesses seeking working capital or equipment upgrades.Tarun:
Loan from ₹5 lakh to ₹10 lakh
Aimed at larger micro-enterprises needing significant investment in equipment or inventory.Tarun Plus (New):
Loan from ₹10 lakh to ₹20 lakh
Available only to entrepreneurs who have availed and successfully repaid a Tarun loan earlier. This category is meant for well-performing businesses planning major expansions.
Interest Rates and Repayment Period
According to State Bank of India (SBI) guidelines, the repayment terms and interest rates under PMMY are as follows:
Loans up to ₹5 lakh:
Repayment period of up to 5 years, with a moratorium of up to 6 months.Loans from ₹5 lakh to ₹20 lakh:
Repayment period of up to 7 years, with a moratorium of up to 12 months.
Interest on Mudra loans is calculated based on the External Benchmark Lending Rate (EBLR). As per current norms, the EBLR is 10%, and an additional 3.25% interest may apply depending on the borrower’s profile and loan category.
How to Apply
To apply for a Mudra loan, individuals can visit any participating bank branch, including SBI and other public or private sector banks. The process is paperless, simple, and requires no collateral. Online application portals are also available for some banks under the e-Mudra loan facility.
Empowering India’s Small Business Sector
The increase in the loan limit is expected to enhance the credit ecosystem for micro enterprises, allowing more room for innovation, employment generation, and business scalability. It aligns with the government’s broader goals under Aatmanirbhar Bharat and Digital India to empower grassroots entrepreneurship.
Entrepreneurs are encouraged to contact their nearest bank branch for updated eligibility criteria, required documents, and application procedures.
Author Profile
- My name is Kuldeep Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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