Pradhan Mantri Mudra Yojana: Beyond the decadal journey to empower India

It is universally acknowledged that micro, small and medium enterprises (MSMEs) form the backbone of the Indian economy. It is estimated that MSMEs contributed about 30.1 per cent to the country’s gross value added (GVA) in 2022-23, while their contribution to India’s total exports was 45.79 per cent in 2024-25.

 

Flow of credit to MSMEs had been a challenge for the formal financial system since independence. However, in recent times, this has significantly changed, with India stack/technology (duly imbibed at banks’ end) and multiple government enablers, Pradhan Mantri Mudra Yojana (PMMY), has been able to bring a substantive change by giving a push to entrepreneurship and self employment.

 

Most beneficiaries of PMMY are first-generation entrepreneurs with humble beginnings that have been able to break free from the financial constraints faced by them.

 

Total disbursements under the PMMY reached ₹5.32 trillion in FY24. By end-February 2025, ₹4.8 trillion had been disbursed (sanctioned amount being ₹4.91 trillion, i.e. 98 per cent disbursement). Among the subcategories, Kishore had a major share (51 per cent) with respect to the amount disbursed, followed by Tarun (29.1 per cent). Average loan size has reached ₹102,870 in FY25, with growth in ticket size seen in almost all the banks during the period.

 

Some of the key features of the PMMY that differentiate it from previous such initiatives include clear definition of non–corporate small business segments, which are linked to size and scale/stage of the business, namely the Shishu (loans up to ₹50,000), Kishore (₹50,001–5 lakh) and Tarun (₹5,00,001–10 lakh) variants, each uniquely signifying the stage of growth / development and funding needs of the beneficiary entities. Recently, the Tarun Plus category has been added covering loans of ₹10-20 lakh.

 

PMMY also has a refinancing mechanism in the form of Micro Units Development & Refinance Agency (MUDRA) to derisk the sector, thereby enabling seamless flow of credit.

 

Emphasis in PMMY is on cash flow-based lending and not security-based lending.

 

Now, borrowers can file online application for credit on Udyam Mitra portal as integration with Udyam Mitra portal has also been achieved.

 

Approximately, 520 million MUDRA loans amounting to ₹33.19 trillion have been extended under the scheme. However, the social impact of the PMMY is much deeper and can be understood at three levels — namely social groups, impact on women and impact on minority communities.

 

In terms of social groups, PMMY, since its implementation, has focussed on providing incremental funding support to weaker sections of the society. The share of sub-categories of borrowers like scheduled caste (SC), scheduled tribe (ST) and other backward classes (OBCs) has consistently increased, forming nearly 50 per cent of the beneficiaries (260 million of the 520 million).

 

Women are an important and integral target segment of PMMY, with close to 69 per cent of the total accounts belonging to women beneficiaries. Interestingly, microfinance institutions (MFIs) have been one of the drivers of increased lending to women, duly helped by bank tie ups.

 

PMMY has also performed well in terms of inclusivity as 57 million of MUDRA loans have been availed by beneficiaries from the minority communities.

 

State Bank of India’s (SBI’s) engagement with the MUDRA ecosystem has been a humbling yet rewarding experience. The bank has financed more than 17.2 million MUDRA loans with the total sanction amount exceeding ₹3 trillion, creating a dynamic entrepreneurial ecosystem to further drive the nation’s impressive economic growth. But, that’s just the beginning.

 

We have been able to contribute significantly due to our focus on digitisation and streamlining the processing and sanctioning of MUDRA loans.

 

SBI has launched MUDRA-BRE, a digital credit decisioning model for loans up to ₹10 lakh with Jansamarth platform as the front-end. This initiative reduces manual efforts, ensuring quick sanctions and improved efficiency. Bank’s heavy presence, specialised skills and connect in corporate credit provides front-end synergy for these aspirational units as they scale up fast.

 

Our efforts to go paperless in credit delivery holds great potential for units desirous of making inroads in new markets / imbibe right technology and connect with suitable partners, with saving of precious resources.

 

MUDRA has been the perfect initiative to support the realisation of our dream of Viksit Bharat as it energises entrepreneurial capacity to an ever-aspirational class across urban areas, as also remote locations, to strengthen two critical factors of production, that is, manufacturing and agri/allied activities as we leverage our demographic dividends.

 

As the scheme completes its 10 years of incredible impact, it is important to glance back and feel proud of the achievements. We must also take key learnings forward to make it more effective, more efficient and more agile to meet the expectations of aspirational India.

 

(The author is the chairman of State Bank of India)