On Wednesday, the Union Cabinet 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 interest subvention would be payable for the accounts which are not in NPA (non--performing asset) category as on 31 March 2020.
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 Prime Minister's Office said in a statement.
The scheme is for implementation of one of the measures relating to MSMEs, announced under the Atma Nirbhar Bharat Abhiyan. 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 (NBFC) and Micro Financial Institutions, registered with Mudra Ltd.