The Union Cabinet on Wednesday 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 (PMMY), aimed at expanding collateral-free credit to women, SC/ST and micro entrepreneurs, according to an official release.
The scheme targets an average of two loans per bank branch—one to a woman entrepreneur and one to an SC/ST entrepreneur. Borrowers will also receive support through the loan process and business cycle. The Credit Guarantee Fund for Stand-Up India will guarantee loans above ₹ 10 lakh and up to ₹ 1 crore for women and SC/ST entrepreneurs setting up greenfield enterprises, according to the government. The guarantee fee will be 0.50% annually, with no additional risk premium, while the guarantee cover will be increased to 85% across loan sizes. The annual guarantee fee will be reduced from 1% to 0.75%, while the government plans to strengthen the claim process for lenders to improve credit flow to micro entrepreneurs.
Meanwhile, the PMMY Credit Guarantee Fund is expected to support Mudra loans worth ₹ 12.60 lakh crore. It will cover PMMY loans of up to ₹ 20 lakh, overdrafts of up to ₹ 10,000 under the Pradhan Mantri Jan Dhan Yojana and self-help group loans of ₹ 10-20 lakh, all without collateral. Also Read I ₹3,230 crore for Yuge Yugeen Bharat National Museum”>Union Cabinet approves ₹ 3,230 crore for Yuge Yugeen Bharat National Museum
