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Bucking the trend of a slowdown seen in the last three quarters, the disbursal of small business loans under the Pradhan Mantri Mudra Yojana (PMMY) has been surging. Contrary to the expectation that the disbursal might fall short when compared to that of the previous year, bankers now expect total disbursal in the current financial year to either surpass or touch last year’s amount, which stood at ₹3.21-lakh crore.
Total loans sanctioned
According to updated government data, total sanctioned loans under Mudra, as on February 20, 2020, stood at ₹2.83-lakh crore, of which, ₹2.77-lakh crore has already been disbursed.
PMMY is a scheme of the Centre to provide loans of up to ₹10lakh to non-corporate, non-farm small/micro enterprises. These loans are classified as Mudra loans under PMMY.
These collateral-free loans come under three categories – Shishu (up to ₹50,000), Kishore (between ₹50,000 and ₹5 lakh) and Tarun (₹10 lakh).
These loans are given by commercial banks, RRBs, small finance banks (SFBs), MFIs and NBFCs. Public sector banks, however, have been the major channels of distribution, with a lion’s share in the total disbursals since the beginning of the scheme. Interestingly, the rapid uptake in small business loans being extended under Mudra was seen only in the last two months before which the sanction and disbursal of advances were very tardy.
As on January 24, 2020, the disbursal of Mudra loans sanctioned stood at ₹1,97,816 crore, while the disbursed loan amount was ₹1,91,970 crore, according to government data.
At the end of November 2019, only ₹1.51-lakh crore was disbursed, which means a little less than two-third of the total loans disbursed was from December 2019 till date to touch ₹2.83-lakh crore.
If one goes beyond Mudra loans data and analyses the overall lending to the Micro and Small Enterprises as a category, there has been a year-on-year growth of 5.7 per cent as on February 11, according to RBI data. The total bank credit deployed in this portfolio was at ₹10,61,953 crore.
Special measures taken
When asked the reasons for the spurt in Mudra loans, a senior official with Andhra Bank said that most banks have been taking special measures to step up loans in view of the dull performance shown in the early quarters of the fiscal.
“Generally, it has always been a trend that disbursal of loans picks up pace in the last quarter of financial year,” he said.
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