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.