About the scheme

• Launched in 2015 to promote entrepreneurship, Pradhan Mantri Mudra Yojana (PMMY) provides loans upto Rs. 10 lakh to the non-corporate, non-farm small/micro enterprises. 
• PMMY aims to “fund the unfunded” by bringing such enterprises to the formal financial system and extending affordable credit to them.
• Under PMMY collateral free loans of upto Rs. 10 Lakh are extended by Member Lending Institutions (MLIs) viz Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Non Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) etc.
• The loans are given for income generating activities in manufacturing, trading and services sectors and for activities allied to agriculture.
• Mudra loans are offered in three categories namely, ‘Shishu’, ‘Kishore’ and ‘Tarun’ which signifies the stage of growth or development and funding needs of the borrowers:-
  • Shishu : covering loans upto  Rs. 50,000/-
  • Kishore : covering loans above  Rs. 50,000/- and upto Rs. 5 lakh
  • Tarun : covering loans above  Rs. 5 lakh and upto Rs. 10 lakh.
• With an objective to promote entrepreneurship among the new generation aspiring youth, it is ensured that more focus is given to Shishu Category loans and then Kishore and Tarun categories.

Why in News?

• In the Union Budget 2024-25, it was announced that the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) would be doubled to Rs.20 lakh from the current Rs.10 Lakh to promote entrepreneurship in the country. 
• A notification in this regard was issued.

As per the notification the new category of Tarun Plus is for loans above Rs.10 lakh and up to Rs.20 lakh and would be available to entrepreneurs who have availed and successfully repaid previous loans under the Tarun category.