Small business loans disbursed under the Pradhan Mantri Mudra Yojana (PMMY) have fallen short of the target set for 2018-19.

Against a target of ₹3-lakh crore, only ₹2.73-lakh crore was disbursed as on March 31, 2019, according to government data. This is first time that the target was unmet in the last three years. “Banks and other agencies involved had worked in a mission mode and disbursed nearly ₹72,000 crore last month, without which the disbursal would have been much lower,” said the senior executive of a public sector bank.

As on March 1, 2019, disbursement under the Mudra scheme was only ₹2.12-lakh crore.

“There were worries about the quality of assets (repayments), which made banks go slow on these loans throughout the year. There was pressure for higher disbursal in March in the backdrop of elections,” he added.

There have been reports of a 50 per cent increase in the non-performing assets of Mudra loans in the first three quarters of last fiscal. In January, the RBI, too, cautioned banks on a spike in bad loans under this segment.

Rapid surge

Loan disbursals have been going up rapidly over the years with regular increase in targets. According to data available with Micro Units Development and Refinance Agency (Mudra), the apex body of Mudra loans, Mudra lending went up by 41 per cent during 2017-18 at 2.46-lakh crore, barely crossing the target of ₹2.40-lakh crore.

The growth, however, came down in 2018-19 at 11 per cent, reflecting caution among lenders. The scheme was launched in 2015 to offer three category of business loans – Shishu (up to ₹50,000), Kishor (₹50,000-5 lakh) and Tarun (₹5-10 lakh) for entrepreneurs.

Excessive focus on the Shishu category, which accounts for bulk of total loans and lack of a facility to scale to a higher category of advances, are seen as some of the structural issues to be addressed in the PMMY scheme by bankers.

Though Mudra has commissioned an impact assessment study last year, the outcome has not been released yet, and its portal has again called for bids for a fresh impact assessment study.

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