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10 Years of Pradhan Mantri Mudra Yojana (PMMY)

Context: In April 2025, PM Mudra Yojana will complete 10 years of its launch. In 10 years 52 crore loans worth ₹32.61 lakh crore were sanctioned.

About Pradhan Mantri Mudra Yojana (PMMY)

Pradhan Mantri Mudra Yojana (PMMY) was launched in 2015,  for providing loans up to Rs. 10 lakh to the non-corporate, non-farm small/micro-enterprises.

A Decade of Growth with PM Mudra Yojana

Ever since it was introduced in April 2015, the Pradhan Mantri Mudra Yojana (PMMY) has disbursed more than 52 crore loans worth ₹32.61 lakh crorecreating a national entrepreneurial waveGrowth of business is no longer limited to metros—now it is reaching small towns and villages, where first-time entrepreneurs are seizing the reins of their own destiny. The shift in mindset is evident: people are no longer job seekers; they are becoming job creators.

Decade of Growth with PM Mudra Yojana

Funding Provision

  • MUDRA stands for Micro Units Development & Refinance Agency Ltd., is a financial institution set up by the Government.
  • These loans are given by Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs.
  • MUDRA does not lend directly to micro-entrepreneurs/individuals.
  • Three products are created under MUDRA, as per the stage of growth and funding needs of the beneficiary micro unit.
    • Shishu: up to ₹ 50,000.
    • Kishore: ₹ 50,000 – ₹ 5 lakh.
    • Tarun: ₹ 5 lakh – ₹ 10 lakh.
    • Tarun Plus: ₹10 lakh – ₹20 lakh (It would be available to entrepreneurs who have availed and successfully repaid previous loans under the Tarun category).

PM Mudra Yojana

  • The guarantee coverage loans for amounts up to ₹20 lakh will be provided under the Credit Guarantee Fund for Micro Units (CGFMU).
    • CGFMU is a government-backed initiative aimed at providing credit guarantee coverage to loans extended to micro-enterprises and small businesses.
    • Established in 2015, this fund is managed by the National Credit Guarantee Trustee Company Ltd. (NCGTC).
  • Loans under the MUDRA scheme are collateral-free loans.

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Key Features of Pradhan Mantri Mudra Yojana (PMMY)

About Pradhan Mantri Mudra Yojana (PMMY)
PMMY Launch
  • It was launched on April 8, 2015, to provide loans up to 10 lakh to non-corporate, non-farm small/micro enterprises.
  • These loans are classified as MUDRA (Micro Units Development & Refinance Agency Ltd.) loans under PMMY.
Pradhan Mantri Mudra Yojana Objectives
  • To refinance collateral-free loans provided by the lenders to small borrowers.
  • To bring small enterprises such as NCSBS (Non-Corporate Small Business Sector) and ‘own account enterprises’ under the folds of the formal financial system
  • To extend the affordable credit to MSMEs.
  • To integrate the informal economy into the formal sector.
PMMY Eligibility
  • Any Indian Citizen who has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading or service sector and whose credit need is less than Rs 10 lakh.
  • Eligible beneficiaries can approach either a Bank, MFI, or NBFC for availing of MUDRA loans under PMMY.
Pradhan Mantri Mudra Yojana Loans
  • The scheme has three categories initially under which loans are disbursed:
    • Shishu – For loan amount up to Rs. 50,000
    • Kishore –For loan amounts from Rs. 50,001 to Rs 5 lakh
    • Tarun – For loan amounts of more than 5 lakhs and up to Rs 10 lakh
  • Under the guidelines of the MUDRA scheme, it would be ensured that at least 60% of the credit flows to ‘Shishu’ Category Units.
  • There will be no subsidy for the loan given under PMMY.
Pradhan Mantri Mudra Yojana Sectors Covered
  • Land Transport Sector / Activity: Such as purchase of transport vehicles for goods and personal transport like auto rickshaws etc.
  • Community, Social & Personal Service Activities: Such as saloons, beauty parlours, gymnasium, boutiques etc.
  • Food Products Sector: Such as Papad making, achaar making, jam/jelly making etc.
  • Textile Products Sector: Such as handloom, power loom, chikan work etc.

Pradhan Mantri Mudra Yojana Loans

  • Public sector banks: Public sector banks accounted for almost 46 per cent of all Mudra loans disbursed in value terms till June 30 this year. For them, bad loans during the seven-year period stood at 98 per cent of their disbursements.
  • Private sector banks: They account for 36 per cent of the value of loans disbursed under the scheme, but they have far better recovery than public sector banks. For them, bad loans during the seven-year period stood at just 1.32 per cent of their disbursements.
  • Regional Rural Banks (RRBs): In terms of the value of loans disbursed, they account for 06 per cent of total and their NPAs are at about 4.22 per cent.
  • Small Finance Banks: Accounted for 27 per cent of total disbursement and their NPAs stood at 2.79 per cent.

Pradhan Mantri Mudra Yojana Benefits

  • In terms of the number of loan accounts, private banks catered to 10.46 crore beneficiaries or almost 53 per cent of the total 19.78 crore loan accounts.
  • On the contrary, public sector banks covered just 4.66 crore beneficiaries, or under 24 per cent of the total Mudra loan accounts.
  • The share of private sector banks is very high in Shishu category loans, while the share of public sector banks is high in Tarun category loans.

Conclusion

Over the past decade, Pradhan Mantri Mudra Yojana has always proved the potential of financial inclusion and the resilience of grassroots innovation. Prior to 2014, credit was typically accessible to those who were well-connected, whereas small entrepreneurs encountered obstacles such as complicated paperwork or had to turn to informal finance. Banks gave out irresponsible loans to large corporates, whereas legitimate borrowers lost access to credit. MUDRA filled this void with a cleaner, inclusive option that provided a level playing field to all.

With more than 52 crore loans approved, the scheme has empowered women, SC/ST/OBC groups, and rural entrepreneurs by increasing access to formal credit. The increase in average loan size, an increasing proportion of MSME credit, and the transition from micro to small enterprises indicate its increasing influence. PMMY is not only driving self-employment and employment generation but also building India’s grassroots economy and promoting inclusive growth.

UPSC PYQ
Q. Pradhan Mantri MUDRA Yojana is aimed at? (2016)

(a)    bringing the small entrepreneurs into formal financial system

(b)   providing loans to poor farmers for cultivating particular crops

(c)    providing pensions to old and destitute persons

(d)   funding the voluntary organisations involved in the promotion of skill development and employment generation

Ans: A

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Sakshi Gupta is a content writer to empower students aiming for UPSC, PSC, and other competitive exams. Her objective is to provide clear, concise, and informative content that caters to your exam preparation needs. She has over five years of work experience in Ed-tech sector. She strive to make her content not only informative but also engaging, keeping you motivated throughout your journey!