New Delhi, Jun 24 (IANS): In a relief for small businesses, the Union Cabinet on Wednesday approved a 2 per cent interest subvention for aShishu' loan borrowers under Pradhan Mantri Mudra Yojana for a period of 12 months.

With small enterprises the worst-hit by the pandemic and the nation-wide lockdown, Finance Minister Nirmala Sitharaman had in May announced that the government would provide the interest subvention to the borrowers to provide relief.

Under the aegis of Pradhan Mantri Mudra Yojana, Micro Units Development and Refinance Agency (MUDRA) has created three levels named 'Shishu', 'Kishore' and 'Tarun' to signify the stage of growth and development and funding needs of the beneficiary micro unit.

Under the Shishu category, loans up to Rs 50,000 are covered.

The government had launched the scheme in 2015-16 to ensure better access to credit for small firms, boost entrepreneurship and promote financial inclusion.