Context: Over 52 crore loans worth more than 32 lakh crore rupees have been sanctioned under Pradhan Mantri Mudra Yojana since the launch of the scheme in 2015. Half of the beneficiaries belong to SC, ST and OBC communities, and over 70% of them are women.
Relevance of the topic:
Prelims: Pradhan Mantri Mudra Yojana (PMMY)
Mains: Benefits of MUDRA Loans
Pradhan Mantri MUDRA Yojana
- Launch: April 8, 2015
- Type: Central Sector Scheme
- Objective: Providing loans up to Rs. 10 lakh to the non-corporate, non-farm small/micro enterprises. These loans are classified as MUDRA loans under PMMY.
- Eligible Member Lending Institutions (MLIs):
- Public Sector Banks
- Private Sector Banks
- State operated cooperative banks
- Rural banks from regional sector
- Micro Finance Institution (MFI)
- Non-Banking Finance Company (NBFC)
- Small Finance Banks (SFBs)
- Other financial intermediary approved by Mudra Ltd. as member financial institutions
- Eligible borrowers:
- Individuals
- Proprietary concern
- Partnership Firm
- Private Ltd. Company
- Public Company
- Any other legal forms
- Application: The borrower can also apply online through portal www.udyamimitra.in
- Interest rate: declared by Member Lending Institutions from time to time as per RBI guidelines based on which applicable interest rate is determined.
Components of MUDRA loans
- The scheme has been classified as:
- Tarun Plus: From FY 2024-25, the upper cap on Tarun loans was increased to ₹20 lakh, for loanees with a good repayment history, which can be given on the discretion of the banks. This has been one of the drivers for higher quantum of loans.
- Key facts- MUDRA:
- MUDRA is a refinancing Institution.
- MUDRA does not lend directly to the micro entrepreneurs / individuals.
Present status of MUDRA Loans
- All-time high disbursal: The disbursal of MUDRA Loans reached an all-time high at ₹3.39 lakh crore in the third quarter of FY 2024-25, that ended December 2024.
- Largest share: SBI has the largest share in the distribution of PMMY loans.
- Reduction in NPAs of PMMY: Aggregate NPAs of PMMY loans decreased to 3.4% in 2023-24 from 4.9% in 2019-20.
Benefits of MUDRA Loans
- Financial Inclusion: Extending financial services to those who are traditionally underserved by the formal banking sector, including small entrepreneurs, micro-enterprises, and self-employed individuals. Funding support helps them start, expand, or modernise their operations.
- Economic Growth: Contribute to the overall economic growth of the country by boosting the productivity and profitability of micro and small enterprises.
- Employment Generation: Facilitate creation of job opportunities and promote entrepreneurship, particularly in rural and semi-urban areas, by supporting small businesses and self-employment ventures.
- Skill Development: Encourage skill development and capacity building among small entrepreneurs and individuals engaged in various trades and businesses.
- Women Empowerment: Empower women entrepreneurs. Promote their participation in economic activities by offering financial assistance and support.
There are certain challenges such as over-indebtedness and the need for a more comprehensive support system. Addressing these challenges and expanding MUDRA's reach can further contribute to economic growth and inclusive development in India.