Mudra loans show record growth to ₹3-lakh crore in Q3 FY24

In a promising New Year development for small businesses, loans disbursed under the Pradhan Mantri Mudra Yojana (PMMY) have soared to an unprecedented ₹3-lakh crore in December 2023, showcasing a remarkable 16% year-on-year growth.

Strong Momentum in Loan Sanctions

The latest figures reveal that sanctioned loans have reached ₹2,99,457 crore a week before the close of the third quarter in the current financial year on December 22, 2023.
This surpasses the ₹2.58-lakh crore mark during the same period in the previous fiscal year.
Provisional data indicates that the milestone of ₹3-lakh crore was crossed by December 29, marking a robust performance.

Empowering Women Entrepreneurs

Government data highlights that women applicants have been instrumental in driving the growth of Mudra loans, with approximately 70% of loans sanctioned to women.
Furthermore, a significant 25% of these loans have been extended to first-time petty entrepreneurs.
Recent reports from the State Bank of India (SBI) Research underline positive trends in disbursals, particularly in the Tarun and Kishor category loans, addressing the ‘missing middle problem’ in enterprise growth.

Diversified Portfolio and Operational Excellence

The Mudra loan portfolio exhibits a well-balanced distribution across retail trade, services, and manufacturing sectors.
An SBI official emphasizes that the process is geared towards operational excellence, leveraging digitalization at both pre and post-disbursal stages.

Safety of Bank Exposure

Economist B Yerram Raju asserts that banks are shielded from adverse consequences related to loans under PMMY due to rigorous system-driven procedures and entrepreneur-driven initiatives.
Additionally, these loans are fully guaranteed, minimizing the risk for financial institutions.
However, Raju points out a minimal engagement with entrepreneurs both pre and post-Mudra loan disbursement, suggesting a potential area for improvement in risk management and support mechanisms.

Questions Related to Exams

What factors contributed to the substantial 16% year-on-year growth in Pradhan Mantri Mudra Yojana (PMMY) loans?
How has the loan disbursement under PMMY evolved, reaching a historic ₹3-lakh crore in December 2023?

Please Try to Answer in the Comment Section!!