Sitharaman announces 2% interest subvention on smallest category of MUDRA-Shishu loans

For small businesses, the minister announced a 2 per cent interest subvention on the smallest category of loans to be given under the MUDRA-Shishu loan scheme, which would add up to ₹50,000.

Finance Minister Nirmala Sitharaman on Thursday announced ₹1500 crore interest subvention for MUDRA-Shishu loan payees of up to ₹50,000, for a period of at least 12 months as part of the second tranche of the ₹20 lakh crore economic stimulus package given by the Centre to cover losses due to the nationwide lockdown.

Small businesses under MUDRA have been disrupted the most and it has also impacted their capacity to pay EMIs, the finance minister said. (WASEEM ANDRABI/HT PHOTO.)

For small businesses, the minister announced a 2 per cent interest subvention on the smallest category of loans to be given under the MUDRA-Shishu loan scheme, which would add up to ₹50,000.

“The Government of India will provide interest subvention of 2% for prompt payees for a period of 12 months. Total relief of ₹1500 crore will be made available by the government to MUDRA-Shishu loanees,” Sitharaman said.

This measure would cost the Central government at least ₹1500 crore annually.

“Small businesses under MUDRA have been disrupted the most and it has also impacted their capacity to pay EMIs. A loan moratorium has already been granted by the Reserve Bank of India (RBI). The current portfolio of MUDRA-Shishu loans is ₹1.62 lakh crore (on maximum loan amount of ₹50,000),” the finance minister added.

The Finance Minister on Thursday announced the second tranche of the ₹20 lakh crore economic stimulus package focussing on migrants, street vendors, traders, self-employed people and small farmers. In a major step by the Union government, the minister also announced free food grain supply to all migrant labourers who are non–card holders or do not fall under the Food Security Act for the next two months.

This is the second phase of announcements by the Union Finance Ministry elaborating on the Centre’s ₹20 lakh crore economic stimulus package.

A day earlier, Sitharaman had said that over the next few days, the finance ministry would hold daily media briefings to put forth Prime Minister Narendra Modi’s vision and share more details on the economic package meant to revive the industry grappling with a 51-day nationwide lockdown. The lockdown had been imposed towards the end of March to contain the spread of the Covid-19 pandemic.