The disbursal of small business loans under Pradhan Mantri Mudra Yojana (PMMY) has almost come out of Covid bluesand may match last fiscal’s figure, going by the current trend.

With one month left for the closure of the current financial year, loans worth ₹2,32,594 crore have been sanctioned as on February 19, 2021, of which, ₹2,19,107 crore has already been disbursed.

In the previous fiscal, total sanctioned loans under Mudra, as on February 20, 2020, stood at ₹2.77-lakh crore.

PMMY is a scheme of the Centre to provide loans of up to ₹10 lakh to non-corporate, non-farm small/micro enterprises. These loans are classified as Mudra loans under PMMY.

These collateral-free loans come in three categories – Shishu (up to ₹50,000), Kishore (between ₹50,000 and ₹5 lakh) and Tarun (₹10 lakh).

Small business loans sanctioned under the PMMY have exceeded the target set for the financial year ended March 31, 2020, at ₹3,37,495 crore.

“Given the fact that banking operations and business were impacted for a significant period of almost two quarters, the present performance of Mudra loans is certainly beyond initial expectations,” a senior official with Union Bank of India, told Business Line .

Reverse migration

The reasons for the steady demand of Mudra loans are varied. According to a senior SBI official, loss of jobs in urban areas due to pandemic-induced circumstances has resulted in reverse migration to rural- and semi-urban areas. “Some of the people are now setting up small business to make a living and PMJY is facilitating this,” he said.

As part of the economic stimulus package, Atmanirbhar Bharat Abhiyaan, the government had also announced interest subvention scheme for Shishu loans.

Under this scheme, loans are given interest subvention of 2 per cent for 12 months from May 2020, which has made these advances more affordable for petty entrepreneurs, say bankers.

Bankers, however, are tight-lipped over the quantum of Non-Performing Assets (NPAs) under Mudra loans in the current financial year. The clear picture on bad loanswill only emerge only after the closure of the current financial year, they say.

As per government data, NPAs in 2019-20 were at 4.80 per cent of the total loans disbursed.

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