Union Cabinet Extends Stand-Up India and Mudra Yojana for Five Years

The Union Cabinet approved the continuation of two credit guarantee schemes for five years, allocating ₹4,111 crore for the Stand-Up India fund and ₹5,000 crore for the Micro Units fund under the Pradhan Mantri Mudra Yojana. The decision aims to expand collateral-free loans for women, scheduled caste, scheduled tribe, and micro business owners.

Stand-Up India Details

The Credit Guarantee Fund for Stand-Up India will guarantee loans between ₹10 lakh and ₹1 crore for women and scheduled caste or scheduled tribe entrepreneurs starting greenfield businesses. The scheme targets an average of two loans per bank branch, split evenly between women and scheduled caste or scheduled tribe applicants. The annual guarantee fee is set at 0.50 percent with no extra risk premium, and the guarantee cover increases to 85 percent across all loan sizes.

Mudra Yojana Details

The Pradhan Mantri Mudra Yojana Credit Guarantee Fund will support Mudra loans worth ₹12.60 lakh crore. It covers loans up to ₹20 lakh, overdrafts up to ₹10,000 under the Pradhan Mantri Jan Dhan Yojana, and self-help group loans ranging from ₹10 lakh to ₹20 lakh without any collateral. The annual guarantee fee drops from 1 percent to 0.75 percent.

Context

Credit guarantee schemes help small business owners secure loans from banks by reducing the risk for lenders if a borrower cannot repay. These government programs specifically target groups that traditionally face challenges in getting funds from regular banks.