Challenges faced by the Mudra  scheme: UPSC Daily Important Topic | 25 April 2023

Challenges faced by the Mudra  scheme:

✓High non-performing assets or bad loans

✓Limited funds that cannot keep up with the pace of demand

✓Regional disparities in the distribution of benefits

✓Lack of financial literacy among beneficiaries leading to defaults

✓Limited outreach to rural entrepreneurs

✓Collateral requirements for loans above a certain amount make it difficult for many small enterprises to access credit

✓Loan size limitations of up to Rs. 10 lakhs, which is inadequate for many small enterprises with higher capital requirements.