Money & Banking

Disbursal of Mudra loans hits the slow lane in FY21

Hyderabad | Updated on December 15, 2020

But despite Covid impact, the difference is minimal when compared to last year

The disbursal of small business loans under Pradhan Mantri Mudra Yojana (PMMY) has been trailing so far in the current fiscal.

The disbursal of Mudra loans stood at ₹1,21,356 crore as on December 11, 2020, compared to about ₹1.51-lakh crore in the same period last year.

Covid impact

While the going appears slow for the small business loan scheme of the government compared to last year, bankers actually see it in positive light. “One has to factor in the impact of Covid-19 pandemic. Despite constraints like lockdown and difficulty in reaching out to people, the difference between last year and this year’s disbursal amount is not so huge,” said a senior official with State Bank of India.

“In fact, Mudra loan segment has been able to deal with Covid challenges and made up for the loss of time,” he added.

Many rural bank branches and MFIs continued to disburse these loans even during the tough days as the lockdown impact and incidence of the pandemic were relatively low in rural areas, according to bankers.

FY20 was a good year for Mudra. The target set by the Government of India under PMMY for FY20 was ₹3.25-lakh crore, which was distributed across various lending institutions, banks, MFIs and NBFCs, based on their outreach and presence in various parts of the country.

According to the latest data available, sanctions in FY20 amounted to ₹3,21,721 crore, registering a 5 per cent growth over the previous year.

But things are different this year due to Covid, and it will be interesting to see how things will turn out for Mudra in the full year.

According to an official with Punjab National Bank, the total loans to be disbursed in the full year might not fall short of last year. An analysis of the trends in disbursal in recent years shows that the last four months of a fiscal are crucial for increase in loan sanctions, he added.

More than half of the total loans were disbursed in the last four months of the fiscal in FY19 and FY20.

Mudra loans are extended in three categories – Shishu (up to ₹50,000), Kishor (above ₹50,000 and up to ₹5 lakh) and Tarun (above ₹5 lakh and up to ₹10 lakh)

Among the three categories, Shishu loans have a lion’s share in the total loans at about 48 per cent.

Published on December 15, 2020

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