UPSC Prelims Practice Questions — PM Mudra Yojana Provides Collateral-Free Loans up to ₹20 Lakh to Entrepreneurs and Enterprises
Q1. Under the Pradhan Mantri MUDRA Yojana, which one of the following loan categories carries the highest credit ceiling?
- A. Shishu
- B. Kishor
- C. Tarun
- D. Tarun Plus
Q2. Within the PMMY framework, the 'Tarun Plus' category is precisely defined as covering which one of the following?
- A. Loans above ₹10 lakh and up to ₹20 lakh, available only to borrowers who have successfully repaid an earlier Tarun loan
- B. Loans above ₹5 lakh and up to ₹10 lakh for all first-time micro entrepreneurs
- C. Loans up to ₹20 lakh available to any new applicant without a prior MUDRA loan
- D. Loans above ₹10 lakh and up to ₹20 lakh reserved exclusively for women entrepreneurs
Q3. PMMY credit is routed through Member Lending Institutions (MLIs). How many broad categories of institutions are classified as MLIs under the scheme?
- A. Two
- B. Three
- C. Four
- D. Five
Q4. MUDRA Ltd., the nodal agency for PMMY, was set up as a wholly-owned subsidiary of which one of the following institutions?
- A. National Bank for Agriculture and Rural Development (NABARD)
- B. Small Industries Development Bank of India (SIDBI)
- C. Reserve Bank of India (RBI)
- D. National Housing Bank (NHB)
Q5. In the Union Budget 2024-25, by what factor was the PMMY loan ceiling enhanced relative to its previous level?
- A. 1.5 times
- B. 2 times
- C. 2.5 times
- D. 4 times
Q6. With reference to the PMMY enhancement announced in Union Budget 2024-25, consider the following statements:
1. The loan ceiling was raised from ₹10 lakh to ₹20 lakh.
2. The enhanced ceiling became effective from 24 October 2024.
3. The newly created Tarun Plus category is open to all first-time micro-entrepreneurs.
4. Guarantee cover for loans up to ₹20 lakh is provided under the CGFMU.
Which of the above is/are NOT correct?
- The loan ceiling was raised from ₹10 lakh to ₹20 lakh.
- The enhanced ceiling became effective from 24 October 2024.
- The newly created Tarun Plus category is open to all first-time micro-entrepreneurs.
- Guarantee cover for loans up to ₹20 lakh is provided under the CGFMU.
- A. 1 and 2
- B. 3 only
- C. 3 and 4
- D. 2 only
Q7. The Credit Guarantee Fund for Micro Units (CGFMU), which backs collateral-free PMMY loans, is administered by which one of the following as its Trustee?
- A. Small Industries Development Bank of India (SIDBI)
- B. National Credit Guarantee Trustee Company Ltd. (NCGTC)
- C. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
- D. National Bank for Agriculture and Rural Development (NABARD)
Q8. Under the CGFMU, guarantee cover for the eligible PMMY loan portfolio is provided up to a maximum of what proportion of the 'Amount in Default'?
Q9. The PMMY objective of 'funding the unfunded' is specifically directed at which one of the following categories of borrowers?
- A. Non-corporate, non-farm income-generating micro and small enterprises lacking access to formal collateral-based credit
- B. Large corporate manufacturing units seeking working-capital expansion
- C. Farmers requiring seasonal crop loans for cultivation
- D. Central and State public sector undertakings
Q10. With reference to PMMY's performance at the completion of 11 years (data as of March 2026), consider the following statements:
1. Over 57 crore loan accounts have been sanctioned since inception.
2. Cumulative disbursement has crossed about ₹40 lakh crore.
3. About one-fifth of the loans have gone to first-time/new entrepreneurs.
4. The scheme was launched on 8 April 2016.
Which of the statements given above is/are correctly identified?
- Over 57 crore loan accounts have been sanctioned since inception.
- Cumulative disbursement has crossed about ₹40 lakh crore.
- About one-fifth of the loans have gone to first-time/new entrepreneurs.
- The scheme was launched on 8 April 2016.
- A. 1, 2 and 3
- B. 2 and 4
- C. 1 and 4
- D. 3 only
Q11. Which one of the following is the flagship Government of India credit programme that extends collateral-free institutional loans up to ₹20 lakh specifically to non-corporate, non-farm micro and small enterprises?
- A. Stand-Up India Scheme
- B. Pradhan Mantri MUDRA Yojana
- C. PM SVANidhi
- D. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
Q12. With reference to the financial-inclusion profile of PMMY (data as of March 2026), consider the following statements:
1. Women borrowers accounted for nearly 60% of total loan accounts.
2. SC/ST/OBC borrowers held about 45% of total loan accounts.
3. New entrepreneurs constituted about 21% of total loan accounts.
4. Credit guarantee for these loans is provided by the CGTMSE.
Which of the above is/are NOT correct?
- Women borrowers accounted for nearly 60% of total loan accounts.
- SC/ST/OBC borrowers held about 45% of total loan accounts.
- New entrepreneurs constituted about 21% of total loan accounts.
- Credit guarantee for these loans is provided by the CGTMSE.
- A. 4 only
- B. 1 and 2
- C. 3 and 4
- D. 2 only