Banks have so far extended loans of Rs 18.6 trillion to around 34.4 crore beneficiaries under the Pradhan Mantri Mudra Yojana (PMMY), which ends on Friday for seven years, the minister said of Finance Nirmala Sitharaman.
Under this scheme, aimed primarily at aspiring entrepreneurs and small entrepreneurs in the non-corporate and non-agricultural sectors, loans of up to Rs 10 lakh are provided to a beneficiary at affordable rates.
Prime Minister Narendra Modi hailed the program’s performance.
Guided by the principle of funding the unfunded, the Mudra Yojana has “gave countless Indians an opportunity to showcase their entrepreneurial skills and become job creators,” Modi said.
Women make up more than 68% of Mudra account holders and 22% of loans have been disbursed to new entrepreneurs, Sitharaman said.
Up to 51% of total sanctioned loans went to recipients in the SC/ST/OBC categories, suggesting the program is synonymous with social justice as well, the minister said.
The program was launched by the Prime Minister on April 8, 2015.
Although the pandemic has accelerated the pace of growth of Mudra loans, disbursement still remained well above the annual average of Rs 2.66 trillion through FY2020.
In FY21, these loan disbursements amounted to Rs 3.12 trillion and in FY22 they reached Rs 3.03 trillion.
Since most Mudra loans are unsecured, experts have warned of growing risks of deteriorating asset quality, although they also admit that the program has improved access to credit for people in vulnerable sections.
Mudra loans are granted to three categories of borrowers: Sishu, Kishore and Tarun. Clients seeking loans up to Rs 50,000 fall under the Sishu category; the Kishore category covers loans above Rs 50,000 and up to Rs 5 lakh; and the Traun category covers loans above Rs 5 lakh and up to Rs 10 lakh.