Government Doubles Mudra Loan Limit to Rs 20 Lakh Introducing Tarun Plus for Emerging Entrepreneurs

Government Doubles Mudra Loan Limit to Rs 20 Lakh Introducing Tarun Plus for Emerging Entrepreneurs

The Indian government announced a significant enhancement in the Pradhan Mantri Mudra Yojana (PMMY) by introducing the Tarun Plus category, which allows banks to offer loans up to Rs 20 lakh. This increase aims to support emerging entrepreneurs, providing greater financial assistance for business growth and expansion, according to a statement from the finance ministry.

Finance Minister Nirmala Sitharaman initially proposed this raised limit in the July 2024 budget, doubling the previous Mudra loan cap from Rs 10 lakh to Rs 20 lakh. The newly introduced Tarun Plus category is designed for entrepreneurs who have successfully repaid loans under the existing Tarun category. The government has assured that loans within this new threshold will be backed by the Credit Guarantee Fund for Micro Units (CGFMU), enabling collateral-free lending for aspiring businesses.

Under PMMY’s existing structure, banks currently provide collateral-free loans in three categories: Shishu (loans up to Rs 50,000), Kishore (loans between Rs 50,000 and Rs 5 lakh), and Tarun (up to Rs 10 lakh). With Tarun Plus, the expanded scope of Mudra loans is set to encourage more entrepreneurs to seek financial support, propelling India’s vision of "funding the unfunded" and fostering self-reliance among new enterprises.