In a big push to entrepreneurship, the Union cabinet on Wednesday approved 'Stand Up India' scheme and creation of a credit guarantee fund to back the Mudra Yojana.

Loans under the scheme would be given for greenfield projects in the non-farm sector.

The cabinet also approved conversion of MUDRA Ltd (Micro Units Development and Refinance Agency), a non-banking financial company, into MUDRA Small Industries Development Bank of India (SIDBI) Bank, a wholly-owned subsidiary of SIDBI. Notably, 17.3 million people have so far benefited under the Mudra Yojana.

A credit guarantee mechanism would also be set up through the National Credit Guarantee Trustee Company (NCGTC) to support the scheme. Loans under the Stand Up India scheme will range between Rs 1 lakh and Rs 1 crore.

The 'Start-up India Stand up India' initiative was announced by the Prime Minister Narendra Modi on August 15, 2015. The Start up India will be launched by Modi on January 16.

Under Stand up India the government aims to achieve the target of at least 2.5 lakh approvals in three years from the launch of the scheme.

Finance Minister Mr Arun Jaitley said the Department of Financial Services had put up the two proposals dealing with credit guarantee fund before the cabinet. The first, with a corpus of Rs 3,000 crore for 2015-16, will support the Mudra loans and the second, with a corpus of Rs 5,000 crore, will back loans given under Stand up India. Under Pradhan Mantri Mudra Yojana, the government has set a target of Rs 1.22 lakh crore for loans to be given by banks in the current fiscal to promote new entrepreneurs and "fund the unfunded".

This will help fund the unfunded section which gets loans by paying interest rates as high as 35% per annum.

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