Small business loans under Pradhan Mantri Mudra Yojana (PMMY) have now become ‘steady’ witnessing a slide for the last two years because of the adverse impact of the Covid-19 pandemic. 

“The loans sanctioned under the current financial year ending March 31, 2022, have almost reached the amount disbursed under PMMY Mudra scheme for the corresponding period last year. In fact, this year’s disbursal might even exceed last year’s sanctioned amount, as data for the last week of March is yet to be received,” a senior official of Micro Units Development and Refinance Agency Ltd (MUDRA) told Business Line

As on March 25, 2022, loans worth ₹3 lakh crore have been sanctioned under different categories of Mudra loans by banks and NBFCs, including microfinance companies. In the previous financial year, loans worth ₹3.21 lakh crore were sanctioned.

“As the data for the last week is yet to be received, the total amount sanctioned in the current fiscal is expected to surpass last year’s figure,” the official said. 

Covid-19 impact wears off

The small business loans gained traction in the first half of the current fiscal itself unlike the previous financial year when they witnessed slowdown. The trend of loans in the first half showed normalisation of the Covid-19 impact with a disbursal of ₹1.17 lakh crore. 

The surge in loan sanctions continued well into the second half showing a ‘steady’ performance with a sanction of ₹1.83 lakh crore to reach ₹3 lakh crore by March 25, 2022.

The data on PMMY performance shows that total disbursal in 2020-21 declined to ₹3.11 lakh crore as against ₹3.29 lakh crore in the previous year mainly on account of the pandemic. However, there has been a steady performance in FY21 and FY22, indicating that PMMY had overcome Covid blues.

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 account for a bulk of about 48 per cent of the total loans.