2nd option is correct. 

The primary product of PM Narendra Modi’s Pradhan Mantri MUDRA Yojana will be providing refinance for lending to micro businesses/units (medium and small entrepreneurs). The initial products and schemes under this umbrella have already been created and the interventions have been named ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur as also provide a reference point for the next phase of graduation / growth for the entrepreneur to aspire for:

1. Shishu: covering loans up to Rs 50,000

2. Kishor: covering loans above Rs 50,000 and up to Rs. 5 lakh

3. Tarun: covering loans above Rs 5 lakh and up to Rs. 10 lakh