Shishu Loans

• Union Cabinet approved a scheme for interest subvention of 2% for a period of 12 months, to all Shishu loan accounts under Pradhan Mantri Mudra Yojana (PMMY) to eligible borrowers.

About:

• The scheme will be extended to loans which meet the following criteria – 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.

• The estimated cost of the Scheme would be approximately Rs. 1,542 crore which would be provided by the Government of India.

• The Scheme will be implemented through the Small Industries Development Bank of India (SIDBI) and will be in operation for 12
months.

Background:

• 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.