Finance Minister Nirmala Sitharaman on Tuesday while presenting the Union Budget 2024 increased the limit of MUDRA loans from Rs 10 lakh to Rs 20 lakh, this will be applicable for those who have availed and successfully repaid loans previously taken under the Tarun category, Union Finance Minister announced on July 23.
Benefits for Small Entrepreneurs
This initiative is particularly beneficial for individuals who face financial constraints in starting their own businesses. The increased loan limit means that they can now access up to Rs 20 lakh, which will be directly transferred to the beneficiary’s bank account. This financial support is expected to significantly boost self-employment and entrepreneurship across the country.
Application Process
MSME borrowers can apply for MUDRA loans through the official portal www.udyamimitra.in. The Pradhan Mantri Mudra Yojana offers three products: ‘Shishu,’ ‘Kishore,’ and ‘Tarun,’ catering to different stages of growth and funding needs for micro units and entrepreneurs. Borrowers will need to pay an upfront guarantee fee and an annual fee based on the reduced loan balance.
New Credit Assessment Model
A new credit assessment model for MSMEs has also been introduced. Public sector banks will develop in-house capabilities to evaluate MSME creditworthiness using digital footprints, moving away from traditional asset or turnover-based criteria. This model aims to provide more effective assessments, even for MSMEs without formal accounting systems, ensuring a broader and fairer distribution of credit.