Shishu loan accounts under Pradhan Mantri Mudra Yojana to eligible borrowers

The government of India has decided to provide 2% interest subvention to borrowers under the ‘Shishu’ category of the flagship Pradhan Mantri MUDRA Yojana (PMMY). Under the Shishu category, collateral free loans of up to ₹50,000 are given to beneficiaries.

Daily Current Affairs Quiz 2020

Key-Points

The scheme will be extended to loans which meet the following criteria – outstanding as on 31st March, 2020; and not in Non-Performing Asset (NPA) category, as per Reserve Bank of India (RBI) guidelines, on 31st March 2020 and during the period of operation of the Scheme.

The interest subvention would be payable for the months in which the accounts are not in NPA category including for the months that the account becomes a performing asset again, after turning NPA. The scheme will incentivize people who will make regular repayments of loans.

The estimated cost of the Scheme would be approximately Rs. 1,542 crore which would be provided by the Government of India.

The Scheme will be implemented through the Small Industries Development Bank of India (SIDBI) and will be in operation for 12 months.

Pradhan Mantri Mudra Yojana

The Pradhan Mantri Mudra Yojana or PMMY is a flagship scheme of the Government of India to extend affordable credit to micro and small enterprises.

Mudra loans are designed to bring enterprises into the formal financial system, or to “fund the unfunded”.

Loans under PMMY scheme are available to non-farm micro or small enterprises engaged in income generation through manufacturing, trading and services.

Enterprises involved in allied agricultural activities can also apply for Mudra loans.