An important update has emerged for those looking to start a small business or self-employment. The Union Cabinet, chaired by Prime Minister Narendra Modi, met and decided to provide a major financial boost to the Pradhan Mantri Mudra Yojana (PMMY). The loan guarantee fund provided to banks and financial institutions providing loans under this scheme has been extended until March 2031. This will provide young people, as well as women, with a great opportunity to stand on their own two feet and start a business.

As part of this decision, the central government has approved a special fund of ₹5,000 crore. This fund will provide loans worth approximately ₹12.6 lakh crore to micro and small entrepreneurs across the country over the next five years. By September 2026, financial institutions have approved loans worth more than ₹60.36 crore under this scheme. The total amount of these loans is ₹43.44 lakh crore. This fund is provided through the National Credit Guarantee Board Company Limited (NCJTC). Banks often hesitate to lend to new entrepreneurs and businessmen because the business is new or they cannot provide sufficient collateral. However, this loan guarantee fund reduces the risk for banks. This decision will encourage banks to more readily lend to small businesses.

Who will benefit?

The scope of the Pradhan Mantri Mudra Yojana has been expanded. This will benefit millions of small businessmen, young entrepreneurs, shopkeepers, and home-based entrepreneurs across the country. It will enable small entrepreneurs in the manufacturing and service sectors to start their own businesses. The Pradhan Mantri Mudra Loan Yojana was launched in 2016. To date, more than 600 million citizens have received loans under this scheme. Extending it until 2031 will further strengthen this sector.

Extension of Stand-Up India Scheme

The Stand Up India scheme was launched to financially empower new entrepreneurs from women, Scheduled Castes, and Scheduled Tribes. The government has also decided to extend this scheme until March 31, 2031. Under this scheme, 2.5 lakh new entrepreneurs will receive loans ranging from ₹10 lakh to ₹1 crore over the next five years. This will boost employment growth in the country.

PC: TV9