In a relief for small businesses, the Union Cabinet on Wednesday (24 June) approved a 2 per cent interest subvention for "Shishu'' loan borrowers under Pradhan Mantri Mudra Yojana for a period of 12 months.
With small enterprises the worst-hit by the pandemic and the nation-wide lockdown, Finance Minister Nirmala Sitharaman had in May announced that the government would provide the interest subvention to the borrowers to provide relief.
"The scheme will be extended to loans which meet the following criteria - outstanding as on 31 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," said an official release.
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 release said.
The scheme will incentivize people who will make regular repayments of loans, it added.
The estimated cost of the Scheme would be approximately Rs 1,542 crore which would be provided by the Government of India.
Under the aegis of Pradhan Mantri Mudra Yojana, Micro Units Development and Refinance Agency (MUDRA) has created three levels named ''Shishu'', ''Kishore'' and ''Tarun'' to signify the stage of growth and development and funding needs of the beneficiary micro unit.
Under the Shishu category, loans up to Rs 50,000 are covered.
The government had launched the scheme in 2015-16 to ensure better access to credit for small firms, boost entrepreneurship and promote financial inclusion.
(With inputs from IANS)
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