Modi's MUDRA scheme raining loans on women and religious minorities

Non-Hindus have got the largest amount per head for loans of less than Rs 50,000, while women have the largest share of the loan pie

The Prime Minister Micro Units Development and Refinance Agency (MUDRA) scheme, launched by the Modi government in 2015, is quite literally showering small amounts on people who were until now turned away by banks. The biggest beneficiary of the MUDRA scheme, which aims to disburse small amounts ranging from Rs 50,000 to Rs 1 million, are women and religious minorities across the country.

Almost eight of every 10 accounts opened for people availing of loans of less than Rs 50,000 were for women. On an average, every woman who availed of a loan in the lowest category got more than Rs 23,000 in loans from banks (See Graphic). According to the latest figures for 2016-17, more than Rs 600 billion worth of loans were given outstanding from the lowest category of borrowers.

However, when it came to larger amounts, the number of women beneficiaries substantially declined. In the highest category of loans – between half Rs 500,000 and Rs 1 million – women accounted for just 9 per cent of total accounts in 2016-17. Women got just about Rs 33 billion of these higher-value loans, representing just about 8 per cent of all the loans in the highest category.

What also differentiates these two classes of women is the changing nature of loan disbursements over time. The amount of loans given to the lowest category of women borrowers increased by Rs 155 billion in 2016-17 over the previous year. But the amount of loans given to the highest category of women borrowers declined by 14 per cent during this period.

Meanwhile, the middle category of borrowers availing of loans of more than Rs 50,000 but less than Rs 500,000 witnessed only a marginal increase.

In its latest annual report, MUDRA has said: “The high number of women borrowers is mainly due to the high share of microfinance institutions in Shishu loans (amount of loans up to Rs 50,000) where women are the major beneficiaries of microfinance loan.”

While women borrowers are the biggest beneficiaries of Modi’s MUDRA scheme, India’s religious minorities also seem to have benefited from these loans. In the lowest category of loans, minorities received the highest amount of loans per capita, at Rs 23,300. This was higher than those received by women availing of loans of up to Rs 50,000 and much higher than the overall average loan disbursements under the scheme.

In fact, loans to minorities in the lowest category saw the biggest jump among all groups. Loan disbursements of up to Rs 50,000 for minorities rose 63 per cent in 2016-17 when compared with the previous year. Loans worth Rs 111 billion in the lowest category were given to them during the year. But, unlike women, minorities saw a substantial increase in loans doled out to them in the highest as well as middle categories.

If the trends in disbursements to women and minorities were the same across India, their biggest beneficiaries would be women in the southern states of Tamil Nadu and Karnataka. Government information shows that 20 per cent of all the loans disbursed under the scheme were in these two states. Half all loans were given out in just five states of India – Karnataka, Tamil Nadu, West Bengal, Uttar Pradesh and Maharashtra. On expected lines, most of this lending was led by public-sector banks, with State Bank of India (SBI) in the vanguard.