The Central Government has recently made MUDRA loans given to joint liability group micro enterprises eligible for the Credit Guarantee Fund for Micro Units.
About MUDRA Loans:
- MUDRA Loan is offered under the Pradhan Mantri Mudra Yojana (PMMY).
- PMMY was launched in 2015 with the aim to help small-scale businesses expand and attain success.
- Support under the scheme: It provides loans of up to 10 lacks to non-corporate, non-farm small/micro enterprises.
- Purpose of loan: To start a new business, enhance existing or meet working capital requirements, and for business expansion purposes
- These loans are classified as MUDRA loans under PMMY.
- Eligibility: Any Indian Citizen who has a business plan for a non-farm sector income-generating activities such as manufacturing, processing, trading, or service sector.
- These loans are given by Commercial Banks, RRBs, Small Finance Banks, MFIs, and NBFCs.
- Types of loans:
- Shishu - Covering loans up to Rs 50,000;
- Kishor - Covering loans above Rs 50,000 and up to Rs 5 lakh;
- Tarun - Covering loans above Rs 5 lakh and up to Rs 10 lakh.
Q1) What is a joint liability group?
Joint Liability Group (JLG) is an informal group comprising preferably of 4 to 10 individuals for the purposes of availing bank loan either individually or through the group mechanism against mutual guarantee.