A Decade of Growth with PM Mudra Yojana

IN NEWS: A Decade of Growth with PM Mudra Yojana

ANALYSIS

1. Context

• India completes 10 years of the Pradhan Mantri MUDRA Yojana (PMMY) on 8 April 2025.
• The scheme was launched in April 2015 to “Fund the Unfunded” by providing collateral-free loans to micro and small enterprises.
• It has emerged as a key driver of grassroots entrepreneurship, financial inclusion, and women-led development.

2. Key Achievements 

A. Credit Outreach and Expansion

1. 52 crore loans sanctioned since 2015 worth ₹32.61 lakh crore.
2. Loans enable micro entrepreneurs across sectors such as tailoring, trading, services, repair shops, manufacturing and more.
3. PMMY supports non-corporate, non-farm small units that form the base of India’s economic pyramid.

B. Impact on MSME Credit Ecosystem

1. MSME lending rose from ₹8.51 lakh crore (FY14) to ₹27.25 lakh crore (FY24); projected to cross ₹30 lakh crore (FY25).
2. MSME share of total bank credit rose to ~20% in FY24.
3. Growth driven significantly by greater formalisation, accessibility and confidence created by Mudra loans.

C. Women Empowerment

1. Women constitute 68% of total Mudra beneficiaries.
2. Per woman disbursement rose at a CAGR of 13% (FY16–FY25).
3. States with high female disbursement recorded higher employment generation via women-led MSMEs.
4. Greater participation supports labour force inclusion and household financial security.

D. Financial Inclusion for Marginalised Communities

1. 50% of Mudra accounts belong to SC/ST/OBC entrepreneurs.
2. 11% of loan accounts belong to minority communities.
3. This indicates strong social inclusion by enabling first-time formal borrowers.

E. Shift from Micro to Small Enterprises

1. Kishor loans (₹50,000–₹5 lakh) increased from 5.9% in FY16 to 44.7% in FY25.
2. Tarun loans (₹5–10 lakh) also increasing, indicating business scaling.
3. Average loan size tripled from ₹38,000 (FY16) → ₹72,000 (FY23) → ₹1.02 lakh (FY25).

F. State/UT-Level Performance

Top Disbursing States (as of 28 Feb 2025)

• Tamil Nadu – ₹3,23,647.76 crore
• Uttar Pradesh – ₹3,14,360.86 crore
• Karnataka – ₹3,02,146.41 crore
• West Bengal – ₹2,82,322.94 crore
• Bihar – ₹2,81,943.31 crore
• Maharashtra – ₹2,74,402.02 crore

Top UT:

• Jammu & Kashmir – ₹45,815.92 crore across 21,33,342 loan accounts.

G. International Recognition

The International Monetary Fund (IMF) acknowledged PMMY in:

• 2017 – Noted strong role in enabling women-led businesses.
• 2019 – Recognised its role in developing and refinancing micro enterprises.
• 2023 – Highlighted growth in women-owned MSMEs (over 2.8 million).
• 2024 – Praised India’s enabling entrepreneurship ecosystem supported by PMMY.

3. Mission and Scheme Design

A. Purpose

• Provide collateral-free institutional credit to micro units.
• Strengthen self-employment and grassroots livelihoods.

B. Implementing Agency

• Micro Units Development and Refinancing Agency (MUDRA) — created by Government of India.

C. Eligible Lending Institutions

• Scheduled Commercial Banks (SCBs)
• Regional Rural Banks (RRBs)
• NBFCs
• MFIs

D. Loan Categories (Interventions)

1. Shishu – Up to ₹50,000
2. Kishor – ₹50,000 to ₹5 lakh
3. Tarun – ₹5 lakh to ₹10 lakh
4. Tarun Plus – Above ₹10 lakh to ₹20 lakh (for Tarun beneficiaries with successful repayment)

4. Broader Significance

• PMMY has formalised informal credit for millions.
• Enhanced self-employment, local job creation, and economic decentralisation.
• Created confidence among first-time borrowers, women entrepreneurs, rural youth and socially marginalised groups.
• Strengthened India’s shift from job-seeking to job-creating economy.

STATIC PART (Relevant Concepts)

1. MUDRA (Micro Units Development and Refinance Agency) – A government agency that refinances microfinance institutions and banks for lending to micro businesses.
2. Collateral-free loans – Loans without security; guaranteed under programmes like Credit Guarantee Fund for Micro Units (CGFMU).
3. MSMEs – Micro, Small and Medium Enterprises; major sources of employment and economic output.
4. Financial Inclusion – Ensuring access to financial services at affordable cost for all sections of society.
5. IMF – International Monetary Fund; global institution monitoring financial stability, growth and economic policy.

Updated – 07 Apr 2025 ; 05:14 PM | News Source: PIB (https://www.pib.gov.in/PressReleasePage.aspx?PRID=2119781)