Mudra Loans Surge Past ₹5 Lakh Crore Mark in FY24

In FY24, small business loans under the Pradhan Mantri Mudra Yojana (PMMY) witnessed a record surge, crossing the ₹5 lakh crore milestone, as per recent government data. Disbursements totaled ₹5.20 lakh crore, a significant increase from ₹4.40 lakh crore in the previous fiscal year. Notably, nearly 70% of the beneficiaries of these loans are women.

Driving Factors Behind Growth

The surge in Mudra loans is attributed to various factors including a lower delinquency rate, motivating public sector banks (PSBs) to boost loan growth. PSBs are closely monitoring fund utilization through consistent follow-ups and frequent customer interactions. Additionally, the institutional framework, including guarantees provided by the National Credit Guarantee Trustee Company Ltd. (NCGTC), encourages lenders to push Mudra loan disbursals further.

Impact and Transformation

Since its inception in 2015, the PM Mudra Yojana has significantly transformed access to collateral-free institutional credit up to ₹10 lakh. In FY24, while the number of PMMY loans sanctioned increased by 4.1% compared to the previous year, the sanctioned amount saw a substantial 14.3% rise. Notably, more than 69% of beneficiaries under this scheme are women.

Managing Delinquency and NPA Trends

Delinquency in Mudra loans is managed through resolution mechanisms such as Lok Adalats, restructuring of eligible accounts, and one-time settlements. The gross non-performing assets (NPAs) in PMMY declined from 3.17% in March 2022 to 2.68% in June 2023, demonstrating effective risk management strategies. NPA data for 2023-24 is yet to be released.