Loans worth Rs 18.60 trn sanctioned to 344 mn borrowers under PMMY in 7 yrs

Marking the seventh anniversary of Mudra scheme, PM Modi tweeted that the scheme has given an opportunity to countless Indians to showcase their entrepreneurial skills and become job creators

About Rs 18.60 trillion has been sanctioned to 344 million borrowers under the Pradhan Mantri Mudra Yojana (PMMY) in 7 year’s since the programme’s launch.

However, sanctions under the scheme fell to the lowest in four years to Rs 3.10 trillion in financial year 2021-22 to 48.6 million borrowers. Out of this, Rs 3.02 trillion was disbursed during the year.

In the last financial year, Rs 3.22 trillion was sanctioned to 48.9 million borrowers, out of which Rs 3.12 trillion was disbursed. The eligibility of such borrowers to avail loans under the Emergency Credit Line Guarantee Scheme (ECLGS) is likely to be one of the reasons for the drop in sanctions. The government had also set the loan disbursement target under the scheme at Rs 3 trillion for the current financial year as compared to Rs 3.12 trillion disbursed in FY21.

Marking the seventh anniversary of Mudra scheme, Prime Minister Narendra Modi tweeted that the scheme has given an opportunity to countless Indians to showcase their entrepreneurial skills and become job creators.

Finance Minister Nirmala Sitharaman, in a statement, said Mudra scheme has helped in creating an enabling environment particularly for small businesses and has helped generate large-scale employment opportunities at the grass roots level.

“More than 68 per cent of the loan accounts have been sanctioned to women and 22 per cent have been given to new entrepreneurs who had not availed any loan since the inception of the scheme,” Sitharaman said.

Under PMMY, credit up to Rs 10 lakh is provided by banks and non-banking financial companies for entrepreneurial activities to small business units, including for new enterprises in sectors such as manufacturing, trading, services and activities allied to agriculture. Loans are sanctioned in three categories ‘Shishu’ (covering loans up to Rs 50,000); ‘Kishore’ (covering loans from Rs 50,000 to Rs 5 lakh) and ‘Tarun’ (covering loans from Rs 5 lakh to Rs 10 lakh).

According to data shared by the government, the average ticket size of loans under the scheme is Rs 54,000 and 86 per cent loans are under ‘Shishu’ category. About 22 per cent of loans have been given to new entrepreneurs and around 68 per cent of the total number of loans has been sanctioned to women.  

Even as sanctions under the scheme have been impressive, non-performing loans have increased over the years. In the financial year 2020-21, total NPAs increased to Rs 34,090 crore from Rs 26,078 crore in FY20. The percentage of bad loans against disbursement increased to 3.61 per cent in FY21 from 2.53 in FY20.