Mudra Loan Scheme Extended to 20 Lakh with New “Tarun Plus” Category

Mudra Loan Scheme Extended to 20 Lakh with New “Tarun Plus” Category

The Government of India has taken a big step to empower small entrepreneurs and strengthen the startup ecosystem by doubling the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) from ?10 lakh to ?20 lakh. Along with this, a new category “Tarun Plus” has been introduced to support existing borrowers who have maintained good credit discipline.

Here’s everything you need to know about this latest upgrade in the Mudra Loan Scheme.

What is the Mudra Loan Scheme?

The Pradhan Mantri Mudra Yojana (PMMY) was launched in 2015 to provide collateral-free loans to small businesses, micro-entrepreneurs, and startups. The loans were categorized into three segments:

• Shishu – Loans up to 50,000
• Kishor – Loans up to 5 lakh
• Tarun – Loans up to 10 lakh

These categories helped businesses at various stages of growth. Now, with the introduction of “Tarun Plus”, entrepreneurs can apply for loans between ?10 lakh to ?20 lakh.

What is the “Tarun Plus” Category?

The “Tarun Plus” category is meant for borrowers who have previously taken a Mudra loan under the Tarun category (?10 lakh) and have successfully repaid it on time.

Under this new category:

• Eligible entrepreneurs can get loans up to ?20 lakh without any collateral.
• This step will help existing businesses scale further without going through the hassle of traditional secured loans.
• The loans are covered under CGFMU (Credit Guarantee Fund for Micro Units), ensuring security for both borrower and lender.

Why was the loan limit increased?

The government's vision is to:

• Help small entrepreneurs expand their businesses.
• Promote formal credit culture among micro units.
• Increase employment generation by supporting scalable businesses.
• Encourage women, youth, and rural entrepreneurs who have already proved their repayment capacity.

A Real-Life Example

Let’s say a woman entrepreneur earlier availed a ?10 lakh loan under the Mudra scheme and started a boutique. She repaid the loan on time. Now, she wants to expand her boutique by adding new designs, hiring more staff, and increasing production.

Earlier, she would need to apply for a new secured loan with collateral, which was challenging. But now, under “Tarun Plus”, she can apply for a ?15 lakh loan without collateral, making business growth much smoother and less stressful.

Impact of the Mudra Scheme 

• Over 52 crore Mudra loans have been sanctioned since 2015.
• The scheme has played a crucial role in formalizing micro-businesses.
• The increase in the loan cap will allow more entrepreneurs to scale without relying on informal sources of credit.

FAQs 

Q1: Who is eligible for the “Tarun Plus” loan?

A: Entrepreneurs who have availed and successfully repaid ?10 lakh under the Tarun category of Mudra scheme are eligible for a fresh loan of ?10–?20 lakh under Tarun Plus.

Q2: Is collateral required for the ?20 lakh loan?

A: No, the loan is collateral-free up to ?20 lakh under this scheme.

Q3: Is the loan available for new applicants?

A: “Tarun Plus” is specifically for those who have already taken and repaid a Mudra loan. New applicants can still apply under Shishu, Kishor, or Tarun based on their eligibility.

Q4: Is there any interest subsidy under “Tarun Plus”?

A: There is no interest subsidy under the scheme. The interest rate will be determined by the respective bank or financial institution.

Q5: Who provides the loan?

A: All public sector banks, private banks, regional rural banks, and NBFCs that are part of the Mudra network.

Q6: Is CGFMU still applicable for Tarun Plus loans?

A: Yes, the Credit Guarantee Fund for Micro Units (CGFMU) will cover the loan under the guarantee, ensuring banks are secure and borrowers don’t need to provide security.

Q7: How to apply for the 20 lakh Mudra loan?

A: Visit your bank branch and inform them that you wish to apply under “Tarun Plus” of the Mudra Scheme. Submit your previous loan repayment record and business expansion plan. The bank will process the loan as per standard procedures.

Q8: Can existing businesses use this to expand?

A: Yes! This is the key purpose. Business expansion, working capital, and technology upgrade are some of the eligible uses for this enhanced loan.

Conclusion

The Tarun Plus upgrade in the Mudra Loan Scheme is a major boost for small businesses in India. It gives deserving entrepreneurs access to bigger credit amounts without collateral and opens the doors to business growth, job creation, and economic progress.

If you're an MSME owner who has shown good repayment discipline, this scheme is your opportunity to grow big — without the baggage of collateral.