Empowering India's entrepreneurs: The transformative role of Mudra loans

India’s economic progress is deeply interwoven with the success of its micro-, small-, and medium-enterprises (MSMEs). The sector not only serves as the backbone of our economy but also plays a pivotal role in employment generation and fostering grassroots innovation. Recognising this potential, the Government of India had launched the Pradhan Mantri Mudra Yojana (PMMY), popularly known as Mudra loan, on April 8, 2015, a game-changing initiative aimed at providing credit to micro and small enterprises (MSEs) that form the core of India’s entrepreneurial landscape.

 

Today, the Mudra loan has become a vital financial lifeline for the unorganised and underserved segments, driving livelihood generation and economic growth. As it completes a decade, its impact is evident in the transformation of semi-urban, rural, and hinterland economies across India. Since its inception, the PMMY scheme has facilitated ₹32 trillion in loans in 51 crore accounts, significantly benefitting marginalised communities. Notably, around 50 per cent of these loans have been availed by SC/ST/OBC borrowers, while 68 per cent have empowered women entrepreneurs, reinforcing its role in financial inclusion.

 

Empowering livelihoods

 

The Mudra loan scheme was conceptualised to provide collateral-free funding in three categories — Shishu (loans up to ₹50,000), Kishore (loans above ₹50,000 to ₹5 lakh), and Tarun (loans above ₹5 lakh to ₹10 lakh). Recognising the evolving needs of successful MSEs, the government introduced a new category — Tarun Plus — in October 2024, raising the Mudra loan limit to ₹20 lakh. This structured approach ensures that businesses at different growth stages receive the necessary financial support tailored to their specific needs.

 

For many small business owners — street vendors, artisans, and rural entrepreneurs — access to formal credit was once a challenge. Mudra loans have empowered micro-entrepreneurs and the self-employed, such as kirana store owners, artisans, and tech startups in Tier-II cities, by bridging banking gaps and unlocking new growth opportunities.

 

Since the launch of the Mudra scheme, Punjab National Bank (PNB) has sanctioned ₹1.35 trillion in over 64.5 lakh loan accounts, reaffirming its commitment towards empowering small businesses and advancing the vision of “funding the unfunded”.

 

Developing women entrepreneurship

 

A noteworthy trend observed in the disbursement of Mudra loans is the increasing participation of women entrepreneurs. Nearly 68 per cent of Mudra beneficiaries are women, a testament to the scheme’s role in fostering financial independence among them. 

 

For instance, Sheela Devi from Haryana, previously limited to a small set up at home, has expanded her furniture shop with the help of a Shishu Mudra Loan from PNB and now employs five other women, creating a ripple effect of employment and self-sufficiency within her community. Similar success stories can be seen across the country in sectors such as manufacturing, retail, services, and agri allied activities.

 

Seamless digital lending

 

PNB’s growing contribution to financial inclusion is driven by simplified lending processes and innovative digital solutions. The PNB e-Mudra Scheme, launched in early 2023, offers an end-to-end digital journey, enabling customers to avail Mudra loans of up to ₹1 lakh through a fully paperless process — without any branch involvement. This platform has ensured instant loan sanction of ₹136 crore to 14,152 beneficiaries.

 

PNB further strengthened its digital offerings by introducing the “Digi MSME Loan” scheme for businesses requiring loans between ₹1 lakh and ₹25 lakh, ensuring timely and hassle-free credit access for borrowers.

 

Strengthening the ecosystem

 

It’s evident that the Mudra scheme has been able to play a pivotal role in providing timely and affordable credit at the grassroots level, empowering entrepreneurs and small businesses in driving income generation and employment growth nationwide. Moving forward, a multi-pronged approach involving enhanced digital lending, greater financial literacy, and stronger credit support mechanisms will be key to accelerating the success of MSEs to fulfill the aspirations of every entrepreneur and realising the vision of Viksit Bharat 2047.

 

In conclusion, the Mudra scheme is not just about financing; it is also about fostering an entrepreneurial spirit that drives India’s economic engine forward. With the right financial support, guidance, and determination, the small businesses of today will be the economic powerhouses of tomorrow. PNB remains committed to innovation, financial inclusion, inclusive banking ecosystem, and continues to play a catalytic role in India’s journey towards self-reliance and economic prosperity.

 

The author is managing director and chief executive officer, Punjab National Bank