Banks are going slow on Mudra loans this fiscal so far and are unlikely to meet the disbursement target.

As on March 1, 2019, the disbursement under the Mudra scheme was ₹2.12 lakh crore. The target for financial year 2018-19 is ₹3 lakh crore. In other words, in less than one month, banks have to disburse almost one-third of the target.

“In the initial two years, the performance of this category of loans was good. But now, there are some concerns, especially in the ‘Sishu’ category of small business loans, which calls for caution though there is pressure to ramp up lending under Mudra,’’ a senior official of a public sector bank told BusinessLine .

The policy of increasing the disbursal target every year ‘unrealistically’ is hurting the banks, he added. The target last year was ₹2.40 lakh crore.

Based on the ground realities, bankers feel that the ‘Tarun’ category of loans have a better repaying capacity but a lion’s share of the loans are being made under the ‘Sishu’ category.

Three types of loans

Launched in April 2015, Mudra offers three categories of loans: Shishu (up to ₹50,000), Kishor (₹50,000-5 lakh) and Tarun (₹5 lakh-10 lakh).

According to data available with the Micro Units Development and Refinance Agency, the apex body of Mudra loans, there has been a 41 per cent growth in Mudra lending during the last fiscal compared with the previous year at ₹2.46 lakh crore against the target of ₹2.40 lakh crore.

While the growth in respect of public sector banks is 29 per cent, the same increased significantly for private sector banks at 27 per cent.

As per figures for the third quarter, some banks like SBI might reach individual targets. In terms of regions, northern, southern and western regions account for top three slots in growth in lending.

But non-performing assets too more than doubled during the year for public sector banks to 3.43 per cent, while bad loans across the total portfolio touched 5.8 per cent.

There have been reports about a warning from the RBI on the rising NPAs under the Mudra segment.

Mudra now has 193 partner institutions comprising 27 public sector banks, 18 private sector banks, 31 regional rural banks, 13 State cooperative urban banks, 73 micro-finance institutions and 31 non-banking financial companies.

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