RBI Panel on MSMEs Suggested Rs 20 Lakh Collateral-Free Loan Under Mudra Scheme

Reserve Bank of India (RBI) expert committee on Micro, Small and Medium Enterprises (MSMEs) headed by the former Securities and Exchange Board of India (SEBI) Chairman U K Sinha, has recommended doubling the capital on collateral-free loans from the current Rs 10 lakh to Rs 20 lakh, for borrowers falling under the Micro Units Development and Refinance Agency (MUDRA), self-help groups, and MSMEs.

According to the 2006 definition, manufacturing units with investment below Rs 25 lakh were termed micro, those between Rs 25 lakh and Rs 5 crore termed small, and from Rs 5 crore to Rs 10 crore medium. For service units, the corresponding amounts were up to Rs 10 lakh for micro, Rs 10 lakh-2 crore for small, and Rs 2 crore-5 crore for medium enterprises.

About Mudra Scheme:

The Pradhan Mantri Mudra Yojana (PMMY) was launched on April 8, 2015, by Prime Minister Narendra Modi. The loans are given to non-corporate, non-farm small and micro-enterprises. In 2018-19, about 60 million loans worth Rs 3 trillion were sanctioned under Mudra.

Under the scheme, collateral-free loan of up to ₹10 lakh falls under three categories – Shishu, Kishore, and Tarun. Shishu accounts for loans of up to ₹50,000, while ₹50,001 to ₹5 lakh are disbursed under Kishore. The third category is for loans of ₹5-10 lakh.

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