New Delhi: The union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved a scheme for interest subvention of 2 percent for a period of 12 months to all Shishu loan accounts under Pradhan Mantri Mudra Yojana (PMMY) to eligible borrowers.
The move is aimed at helping the MSMES. The ongoing COVID-19 crisis and the consequent lockdown has led to severe disruption of business for micro and small enterprises which are funded through Shishu Mudra loans.
The scheme will be extended to loans outstanding as on 31st 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.
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 scheme will incentivize people who will make regular repayments of loans, an official statement said.
The estimated cost of the Scheme would be approximately Rs 1,542 crore which would be provided by the government.
Under PMMY, loans for income generating activities up to Rs 50,000 are termed as Shishu loans.
PMMY loans are extended by Member Lending Institutions viz. Scheduled Commercial Banks, Non Banking Finance Companies and Micro Financial Institutions, registered with Mudra Ltd.
As on March 31, 2020, about 9.37 crore loan accounts under the Shishu category of PMMY with a total loan amount of about Rs 1.62 Lakh crore, were outstanding, the release said.