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

Pradhan Mantri MUDRA Yojana (PMMY): In the last eight years, the Pradhan Mantri MUDRA Yojana (PMMY) has sanctioned 41 crore loans totaling 23.2-lakh crore, according to the Ministry of Finance. The scheme has been a huge success in terms of promoting entrepreneurship, with 68% of accounts under the scheme belonging to female entrepreneurs and 51% belonging to entrepreneurs from the 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 small entrepreneurs with loans of up to ten lakh rupees to help them start or expand their businesses. The announcement demonstrates the government’s initiative to promote financial inclusion and entrepreneurship in India’s success.

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Key points of the Pradhan Mantri MUDRA Yojana (PMMY)

• The Government of India launched the Pradhan Mantri MUDRA Yojana (PMMY) on April 8, 2015, with the goal 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 intended to fulfil “Funding the Unfunded,” one of the three pillars of financial inclusion. 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.