PSBs at only 42% of FY25 MUDRA disbursement target by October-end

Public Sector Banks (PSBs), including their sponsored Regional Rural Banks (RRBs), have achieved only 42 per cent of their current financial year (FY25) disbursement target for MUDRA loans by the end of October, according to an internal document seen by Business Standard.

 

Out of a target of Rs 2.3 trillion for FY25, the banks have disbursed Rs 97,094 crore by October 25, 2024, the document showed.

 

Bank of Baroda has shown the lowest achievement among PSBs, with only 16 per cent of its annual MUDRA disbursement target met in the first seven months of FY25. The annual target for Bank of Baroda is Rs 22,000 crore, out of which it has disbursed only Rs 3,515 crore by October 25.

 

State Bank of India (SBI), the largest PSB, with an annual target of Rs 60,000 crore, has disbursed Rs 26,420 crore, or 44 per cent, so far.

 

Canara Bank has achieved 52 per cent of its annual target while Union Bank of India has achieved 57 per cent, the highest among PSBs, of its FY25 target.

 

As of October 25, MUDRA loans amounting to Rs 28,511 crore, or 12.4 per cent of the annual target for PSBs, is still under process. Recently, the government doubled the limit for MUDRA loans under the Pradhan Mantri Mudra Yojana (PMMY) to Rs 20 lakh from Rs 10 lakh, introducing a new “Tarun Plus” category to promote entrepreneurship in the country.

 

“These are all microfinance loans. The microfinance sector is facing significant difficulties, with many institutions reporting higher non-performing assets (NPAs) and sharply declining profits. Some microfinance institutions have been debarred by the Reserve Bank of India (RBI) from accepting fresh deposits and disbursing loans. I believe the reduced sanctioning of MUDRA loans is the combined effect of these factors,” said Subhash Chandra Garg, former finance secretary of India.

 

According to government data, 66.8 million loans were sanctioned under the PMMY scheme in 2023-24 alone, amounting to Rs 5.4 trillion. As of June 2024, more than 487.8 million loans totalling Rs 29.79 trillion have been sanctioned since the scheme’s inception on April 8, 2015.

 

“The fall in the target is due to higher NPAs in MUDRA loans. However, the situation is steadily improving. We are working to clear all pending loan requests. We expect a surge in disbursements in the fourth quarter (Q4). As a bank, we are taking extra precautions, as many fraudulent cases related to MUDRA loans have been reported,” said a senior bank official, speaking on the condition of anonymity.