More than 34.42 crore Loan accounts totaling Rs.18.60 lakh crore opened since launch of Pradhan Mantri Mudra Yojana

As we commemorate the seventh anniversary of delivering financial inclusion via the pillars of the Pradhan Mantri MUDRA Yojana (PMMY), let us take a look at some of the important components of this Scheme and its accomplishments.

PMMY was launched on April 8, 2015, by Prime Minister Shri Narendra Modi, to provide loans of up to Rs. 10 lakh to non-corporate, non-farm small/micro companies.

Smt. Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs, said on the Scheme’s 7th anniversary, “It is notable that more than 34.42 crore loan accounts equal to Rs.18.60 lakh crore have been opened under the Scheme for the formation of income-generating businesses.”

On the theme of the business environment and large-scale employment opportunities provided by PMMY, the Finance Minister stated, “The Scheme has assisted in creating an enabling environment, particularly for small businesses, and has assisted in generating large-scale employment opportunities at the grass roots level.” More than 68 percent of loan accounts have been sanctioned to women, and 22 percent of loans have been granted to new entrepreneurs who have not received a loan since the Scheme’s start.”

“With 51 percent of total loans sanctioned so far going to the SC/ST/OBC category, the Pradhan Mantri Mudra Yojana stands for social justice in action and embodies the true spirit of ‘Sabka Saath, Sabka Vikas,’ as envisioned by the Hon’ble Prime Minister,” Smt. Sitharaman said, greeting and congratulating all Mudra beneficiaries and urging other prospective borrowers to come forward and participate in the nation-building process

Dr Bhagwat Kisanrao Karad, Union Minister of State (MoS) for Finance, stated on the occasion, “The driving force behind the launch of the Pradhan Mantri Mudra Yojana (PMMY) has been to give institutional credit to micro, small, and medium companies in a trouble free/seamless way.”

“Over the previous seven years, the scheme has successfully reached out to potential entrepreneurs by giving help to 34.42 crore account holders,” the MoS added.

“The other significant focus of PMMY has been able to extend credit to a growing number of beneficiaries from the ‘aspirational districts’ defined by Niti Aayog, thus enabling flow of credit to these credit-starved districts,” the MoS stated.

The country’s Financial Inclusion (FI) initiative is built on three pillars: banking the unbanked, securing the unsecure, and funding the unfunded. These three objectives are being met through the use of technology and a collaborative strategy involving several stakeholders, all while reaching the unserved and underserved.

One of the three pillars of FI, Funding the Unfunded, is mirrored in the FI ecosystem through PMMY, which is being implemented with the goal of providing small entrepreneurs with access to loans. Through its many projects, PMMY focuses on the financial requirements of all stakeholders, ranging from aspiring businesses to hardworking farmers.

Pradhan Mantri MUDRA Yojana (PMMY) is an important effort for providing financial help to the underprivileged and previously socioeconomically disregarded sections. It has given millions of people wings to their dreams and aspirations, as well as a sense of self-worth and independence.

Let us have a look at the important components of this PMMY and its accomplishments over the last seven years:

Major aspects of Pradhan Mantri Mudra Yojana (PMMY):

• Under PMMY, loans of up to Rs.10 lakh are made available through Member Lending Institutions (MLIs), which include banks, non-banking financial companies (NBFCs), micro financial institutions (MFIs), and other financial intermediaries, and are classified into three categories: ‘Shishu,’ ‘Kishore,’ and ‘Tarun,’ indicating the stage of growth or development and funding requirements of the borrowers.

i) Shishu : covering loans up to Rs. 50,000/-
ii) Kishore : covering loans above Rs. 50,000/- and up to Rs. 5 lakh
iii) Tarun : covering loans above Rs. 5 lakh and up to Rs. 10 lakh

• With the goal of encouraging business among the next generation of aspiring youth, more emphasis is placed on Shishu category loans, followed by Kishore and Tarun categories.
• MUDRA’s goods are developed to fulfil the needs of various sectors and commercial activities within the framework and ultimate goal of developing and growing the micro enterprise sector under Shishu, Kishore, and Tarun.
• Loans under PMMY are made available to meet both the term loan and working capital components of financing for income-generating businesses in the manufacturing, trading, and service sectors, as well as activities related to agriculture such as poultry, dairy, beekeeping, and so on.
• Lending institutions set interest rates in accordance with RBI standards. In the event of a working capital facility, interest is only paid on funds held overnight by the borrower.

Achievements of this Scheme (As on 25.03.2022)

• More than 34.42 crore loans for an amount of Rs 18.60 lakh crore have been sanctioned since launch of the scheme (as on 25.03.2022). Approximately 22% of the total loans have been sanctioned to New Entrepreneurs.
• 4.86 crore PMMY loans accounts with sanctioned amount of Rs. 3.07 lakh crore extended in current FY (As on 25.03.2022)
• Approximate 68% loans of the total number of loans have been sanctioned to Women Entrepreneurs
• The average ticket size of the loans is about Rs 54,000/-
• 86% of the loans are of ‘SHISHU’ category
• Almost 22% of the loans have been given to New Entrepreneurs
• About 23% of the loans have been given to SCs and STs borrowers; About 28% of the loans have been given to
• OBCs borrowers (Total 51% loans have been sanctioned to SC/ST/OBC categories of borrowers)
• About 11% of the loans have been given to Minority community borrowers