According to the Department of Financial Services, this fund will cover micro loans up to the prescribed limit (Rs 20 lakh) given by landing institutions to an eligible borrower.
The Finance Ministry has doubled the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) to Rs 20 lakh with immediate effect. Finance Minister Nirmala Sitharaman announced this scheme in the Union Budget 2024-25 on 23 July. The aim of Pradhan Mantri Mudra Yojana is to encourage emerging entrepreneurs by providing them more funding options.
A new loan category Tarun Plus now covers loans ranging from Rs 10 lakh to Rs 20 lakh. It is exclusively available to entrepreneurs who have previously taken and successfully repaid a loan under the ‘Tarun’ category. Apart from this, loans up to Rs 20 lakh will be supported by the Credit Guarantee Fund for Micro Units (CGFMU). This reflects the government’s commitment to promote a strong entrepreneurial ecosystem.
According to the Department of Financial Services, the fund will cover micro loans up to the prescribed limit (Rs 20 lakh) given by lending institutions to an eligible borrower.
Meanwhile, lending institutions will have to apply for guarantee cover in respect of approved loans within the prescribed time period and as per the procedures prescribed by the fund for this purpose. Apart from this, overdraft loan amount of Rs 10,000 approved under PMJDY accounts will also be eligible to be covered under the Credit Guarantee Fund.
