The Ministry of Finance on Saturday said that around 41 crore loans amounting to ₹23.2-lakh-crore were sanctioned under the Pradhan Mantri MUDRA Yojana (PMMY) in the last eight years of existence of the scheme. The PMMY was launched on April 08, 2015.

Taking to Twitter, Prime Minister Narendra Modi said the scheme has played a vital role in ensuring a life of dignity as well as prosperity for countless Indians.

“PM Mudra Yojana has played a vital role in funding the unfunded and ensuring a life of dignity as well as prosperity for countless Indians. Today, as we mark eight years of MudraYojana, I salute the entrepreneurial zeal of all those who benefitted from it and became wealth creators,” the Prime Minister said.

“Since the launch of the scheme, as of March 24, 2023, about ₹23.2-lakh-crore has been sanctioned in 40.82 crore loan accounts. About 68 per cent of accounts under the scheme belong to women entrepreneurs and 51 per cent of accounts belong to entrepreneurs of SC/ST and OBC categories. This demonstrates that easy availability of credit to the budding entrepreneurs of the country has led to innovation and sustained increase in per capita income,” a statement quoting Finance Minister Nirmala Sitharaman said.

The scheme aims to facilitate easy collateral-free micro credit of up to ₹10 lakh to non-corporate, non-farm small and micro entrepreneurs for income generating activities. The loans under PMMY are provided by banks, non-banking financial companies (NBFCs), micro finance institutions (MFIs) and other financial intermediaries.

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On disbursements, officials in the Ministry of Finance have clarified that there is a slight lag between the sanctions and disbursements due to processing of various documents.

Make In India

The Finance Minister has said that the growth of MSMEs (Micro, Small and Medium Enterprises) has contributed massively to the “Make in India” programme as strong domestic MSMEs lead to increased indigenous production both for domestic markets as well as for exports.

“The PMMY scheme has helped in the generation of large-scale employment opportunities at the grassroots level and also has proved to be a game changer while boosting the Indian economy,” she said.

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On the occasion, Minister of State for Finance Bhagwat Kisanrao Karad said that the PMMY scheme aims to provide collateral free access to credit in a seamless manner to micro enterprises in the country.

“The government policy of promoting MUDRA has led millions of MSME enterprises in the formal economy and has helped them to get out of the clutches of money-lenders offering very high-cost funds,” he said.

It has brought the unserved and under-served sections of the society within the framework of institutional credit, he added.

Financial Inclusion

The Finance Ministry’s statement highlighted that the scheme aims to fulfill one of the three pillars of the financial inclusion—‘Funding the Unfunded’. Other two pillars are ‘Banking the Unbanked’ and ‘Securing the Unsecured’.

Under the scheme, the loans have been divided into three categories based on the need for finance and stage in maturity of the business. These are Shishu (loans up to ₹50,000), Kishore (loans above ₹50,000 and up to ₹5 lakh), and Tarun (loans above ₹5 lakh and up to ₹10 lakh). 

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Loans under PMMY are provided to meet both term loan and working capital components of financing for income generating activities in manufacturing, trading and service sectors, including activities allied to agriculture such as poultry, dairy, beekeeping, etc. 

The rate of interest is decided by lending institutions as per RBI guidelines. In case of working capital facility, interest is charged only on money held overnight by borrower.