RBI red flags rising Mudra bad loans, asks banks to 'monitor closely'

The Mudra loan scheme was launched by Prime Minister Narendra Modi in 2015 to help the highly under-funded small and medium industries with cheap bank loans

Reserve Bank deputy governor MK Jain on Tuesday warned bankers about the growing stress in Mudra loans, which has crossed more than Rs 3.21 trillion system-wide, and asked them to monitor such loans closely as unsustainable credit growth in the sector can risk the system.

Prime Minister Narendra Modi had launched the Mudra scheme in April 2015 with much fanfare to offer speedier credit up to Rs 10 lakh to small businesses which are non- corporate, non-farm small/micro enterprises and which normally do not get bank funds due to their poor and mostly no credit rating. These loans are extended