MUDRA Loan scheme towards financial inclusion sanctioned 41 crore loans in eight years

Pradhan Mantri MUDRA Yojana (PMMY)

The Ministry of Finance announced  that the Pradhan Mantri MUDRA Yojana (PMMY) has sanctioned 41 crore loans amounting to ₹23.2-lakh-crore in the past eight years. The scheme has shown significant success in promoting entrepreneurship, with 68% of accounts under the scheme belonging to women entrepreneurs and 51% belonging to entrepreneurs from SC/ST and OBC categories. This data highlights that the availability of easy credit to budding entrepreneurs has led to innovation and a sustained increase in per capita income. The PMMY scheme aims to provide loans of up to ₹10 lakh to small entrepreneurs to start or expand their businesses. The announcement demonstrates the success of the government’s initiative in promoting financial inclusion and entrepreneurship in India.

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Key points of the Pradhan Mantri MUDRA Yojana (PMMY)

• The Pradhan Mantri MUDRA Yojana (PMMY) was launched on April 08, 2015, by the Government of India with the aim of providing collateral-free microcredit up to Rs 10 lakh to non-corporate, non-farm small and micro-enterprises. The scheme is a part of the Micro Units Development and Refinance Agency (MUDRA) initiative, which was launched to support small and micro enterprises across the country.
• The loans are provided by various financial intermediaries such as banks, non-banking financial companies (NBFCs), and microfinance institutions (MFIs). Although 41 crore loans have been sanctioned under the PMMY scheme, there may be a slight lag between the sanctioning and disbursement of loans due to processing of various documents. Nonetheless, the scheme has proven to be a successful initiative in promoting entrepreneurship and financial inclusion among women and underprivileged categories.
• The Pradhan Mantri MUDRA Yojana (PMMY) is designed to fulfill one of the three pillars of financial inclusion, which is “Funding the Unfunded”. The other two pillars are “Banking the Unbanked” and “Securing the Unsecured”. The loans under PMMY are categorized into three types based on the borrower’s need for finance and the stage of the business’s maturity. These categories are Shishu (loans up to ₹50,000), Kishore (loans above ₹50,000 and up to ₹5 lakh), and Tarun (loans above ₹5 lakh and up to ₹10 lakh).
• The loans under PMMY are provided for both term loan and working capital components of financing for income-generating activities in manufacturing, trading, and service sectors, including activities related to agriculture such as poultry, dairy, and beekeeping. The lending institutions determine the interest rates as per the guidelines of the Reserve Bank of India (RBI). In the case of a working capital facility, interest is charged only on the amount held overnight by the borrower.

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