A Decade of PM Mudra Yojana (PMMY)

GS2 – Ministry of Finance – Government Schemes

The Pradhan Mantri Mudra Yojana (PMMY) has completed ten years since its inception, marking a significant milestone in India’s journey of financial inclusion and micro-enterprise support.

Objectives of PMMY:

Launched by the Ministry of Finance, the scheme is intended to provide collateral-free financial assistance to unfunded micro and small businesses, thereby enhancing access to formal credit systems.

Loan Categories and Coverage:

Loans under this scheme are extended through Member Lending Institutions (MLIs) such as Scheduled Commercial Banks, Regional Rural Banks (RRBs), Non-Banking Financial Companies (NBFCs), and Micro Finance Institutions (MFIs). Credit is available up to ₹20 lakh, divided into the following segments:

• Shishu: Up to ₹50,000
• Kishor: ₹50,001 to ₹5 lakh
• Tarun: ₹5,00,001 to ₹10 lakh
• Tarun Plus: ₹10,00,001 to ₹20 lakh (targeted at previous Tarun borrowers who have demonstrated strong repayment history)

Role of MUDRA:

The Micro Units Development and Refinance Agency (MUDRA) was established by the Government of India as a refinancing body. It does not directly lend to borrowers but supports last-mile financial intermediaries in extending credit to non-corporate small businesses.

Key Achievements over the Decade:

1. Boosting Entrepreneurship:

• Since its launch, over 52 crore loans have been sanctioned, totaling ₹32.61 lakh crore, catalyzing a surge in micro-entrepreneurial activity.
• The average loan size has significantly risen from ₹38,000 (FY16) to ₹72,000 (FY23), reaching ₹1.02 lakh in FY25.

2. Shift in Credit Profile:

• The share of Kishor category loans rose sharply from 5.9% in FY16 to 44.7% in FY25, reflecting the scaling-up of enterprises from micro to small levels.

3. State-Wise Credit Disbursal:

• Tamil Nadu leads in total disbursement (₹3.23 lakh crore), followed by Uttar Pradesh (₹3.14 lakh crore) and Karnataka (₹3.02 lakh crore).

4. Growth in MSME Lending:

• Credit to the MSME sector surged from ₹8.51 lakh crore (FY14) to ₹27.25 lakh crore (FY24).
• The MSME share in total bank credit increased from 15.8% to nearly 20% over the same period, helping promote industrial growth in semi-urban and rural areas.

5. Women Empowerment:

• Women constitute 68% of PMMY beneficiaries.
• From FY16 to FY25, the average loan size for women borrowers grew at a CAGR of 13%, reaching ₹62,679, reinforcing female entrepreneurship.

6. Support for Marginalized Communities:

• As per a State Bank of India (SBI) report, half of all Mudra accounts are owned by SC, ST, and OBC entrepreneurs.
• Additionally, 11% of beneficiaries are from minority communities, showcasing the scheme’s inclusivity.

7. Global Acknowledgement:

• The International Monetary Fund (IMF) has lauded the PMMY for its positive contribution to inclusive financial access and grassroots entrepreneurship in India.