The Union Finance Ministry’s Department of Financial Services (DFS) has launched a new loan category under the Pradhan Mantri Mudra Yojana (PMMY), called ‘Tarun Plus.’ Designed to support micro and small business owners seeking expansion, this initiative allows eligible entrepreneurs to access loans between Rs 10 lakh and Rs 20 lakh, doubling the previous loan cap of Rs 10 lakh under the Mudra Scheme.
The DFS announced the launch of ‘Tarun Plus’ following Finance Minister Nirmala Sitharaman’s budget pledge to elevate financial support for small businesses as part of the Union Budget 2024-25. In a post on social media platform X, the DFS highlighted, “As part of a budget announcement by the Finance Minister, the limit for Mudra loans has been enhanced from Rs 10 lakh to Rs 20 lakh, empowering entrepreneurs for growth under #PMMY in Union Budget 2024-25.”
Aimed at entrepreneurs who have already repaid their previous ‘Tarun’ loans, ‘Tarun Plus’ provides an extended financial resource for business expansion. This new loan category offers a robust support system for borrowers who have demonstrated successful repayment of earlier Mudra loans, helping them to move confidently into the next phase of growth.
Guarantee coverage and credit support
With the expansion, the DFS also announced an enhancement in guarantee coverage, now extended to Mudra loans up to Rs 20 lakh. The additional coverage will be provided under the Credit Guarantee Fund for Micro Units (CGFMU), offering more security and support to borrowers under the scheme. A DFS post on X further emphasised, “The guarantee coverage for #PMMY loans up to Rs 20 lakh will now fall under the Credit Guarantee Fund for Micro Units (CGFMU). Supporting dreams, one step at a time.”
This adjustment aligns with the government’s commitment to providing collateral-free and third-party guarantee-free loans to micro-entrepreneurs, aiming to make financial assistance more accessible and attractive for India’s vast pool of small business owners.
Mudra Scheme: Stages of growth for MSMEs
The PMMY offers loans at different funding levels—‘Shishu,’ ‘Kishor,’ ‘Tarun,’ and now, ‘Tarun Plus’—reflecting the progressive stages of growth for micro and small businesses. Each level serves as a benchmark, allowing business owners to seek appropriate funding as their ventures develop, creating a structured path from initial setup to expansion.
The addition of ‘Tarun Plus’ highlights the government’s strategy to bolster a self-reliant economy by fueling the ambitions of small business owners and budding entrepreneurs. By easing access to capital and reducing financial risks, the DFS aims to strengthen India’s entrepreneurial landscape and promote financial inclusion across the country.
Since its inception, the Mudra Scheme has provided support to India’s micro-entrepreneurs, focusing on #FundingTheUnfunded and ensuring that financial backing reaches those who need it most. The recent extension with ‘Tarun Plus’ is expected to further catalyse growth in the MSME sector, fostering innovation, employment, and economic growth across the nation.
