Under which scheme are collateral free loans of up to ₹10 Lakh extended by the Member Lending Institutions (MLIs) in India?
- (a)Stand Up India scheme
- (b)Pradhan Mantri Jan Dhan Yojana
- (c)National Strategy for Financial Inclusion
- (d)Pradhan Mantri MUDRA Yojana
Answer
Why
Correct — D. Pradhan Mantri MUDRA Yojana is the scheme that carries collateral-free loans of up to ₹10 lakh to non-corporate, non-farm micro and small enterprises.
The give-away is the phrase Member Lending Institutions. MUDRA does not hand money to the borrower itself — it refinances the banks, NBFCs and microfinance institutions that make the loan, and those are the MLIs. That structure is what fixes the ₹10 lakh ceiling to option (d).
Why the others are wrong
- (a)Stand Up India scheme — Stand Up India lends between ₹10 lakh and ₹1 crore, and only to SC, ST or women entrepreneurs setting up a greenfield enterprise. Different ceiling, different eligibility.
- (b)Pradhan Mantri Jan Dhan Yojana — Pradhan Mantri Jan Dhan Yojana is the financial inclusion mission for basic bank accounts. Its credit component is a small overdraft, not a ₹10 lakh business loan.
- (c)National Strategy for Financial Inclusion — The National Strategy for Financial Inclusion is a Reserve Bank policy document that sets direction for the system. It disburses nothing, so no loan ceiling attaches to it.
Concept
MUDRA stands for Micro Units Development and Refinance Agency, and the name gives away the model. The agency sits behind the lender rather than in front of the borrower.
It refinances Member Lending Institutions — scheduled banks, regional rural banks, NBFCs and microfinance institutions — which carry the loan on their own books.
Loans are graded by size: Shishu up to ₹50,000, Kishore from ₹50,000 to ₹5 lakh and Tarun from ₹5 lakh to ₹10 lakh. The scheme was launched in 2015 and covers non-farm income-generating work in manufacturing, trading and services.
The ₹10 lakh figure is the ceiling the scheme carried when this paper was set. Check the current limit before quoting it anywhere outside this question.
Key facts
- Pradhan Mantri MUDRA Yojana extends collateral-free loans of up to ₹10 lakh to non-corporate, non-farm micro and small enterprises.
- The loan is made by a Member Lending Institution such as a bank, an NBFC or a microfinance institution, and MUDRA refinances it.
- The three loan categories are Shishu up to ₹50,000, Kishore up to ₹5 lakh and Tarun up to ₹10 lakh.
- The scheme was launched in 2015.
Study next
Common traps
- Reading Member Lending Institutions as a scheme in its own right rather than as the banks and NBFCs that deliver MUDRA.
- Confusing MUDRA with Stand Up India, whose range begins at ₹10 lakh, where MUDRA stops.
- Treating Jan Dhan as a lending scheme because it is also about access to credit.
The same scheme family is asked from the inclusion side at 12 Sep 2024, 09:00, GA Q.5, on the National Mission for Financial Inclusion, and from the objective side at 17 Sep 2024, 16:00, GA Q.8, on what Standup India is primarily for.
Related PYQs
No directly related past PYQ was found.