“PMMY enabling flow of credit to growing number of beneficiaries to credit-starved ‘aspirational districts’”: Dr Bhagwat Kisanrao Karad

As we celebrate the 7^th anniversary of providing financial inclusion through the pillars of Pradhan Mantri MUDRA Yojana (PMMY), let us glance through some of the major aspects of this Scheme and its achievements.

PMMY was launched by the Prime Minister Narendra Modi on 8^th April, 2015, for providing loans up to Rs. 10 Lakh to the non-corporate, non-farm small/micro enterprises.

While celebrating the 7^th anniversary of the Scheme, Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman said, “It is noteworthy that more than 34.42 crore loan accounts amounting to Rs.18.60 lakh crore have been opened under the Scheme for the creation of income generating activities.”

On the theme of business environment and large-scale employment opportunities through PMMY, the Finance Minister said, “The Scheme has helped in creating an enabling environment particularly for small businesses and has helped generate large-scale employment opportunities at the grass roots level. More than 68% of the loan accounts have been sanctioned to women and 22% of the loans have been given to new entrepreneurs who had not availed any loan since the inception of the Scheme.”

While greeting and congratulating all the Mudra beneficiaries and urging other prospective borrowers to come forward and take part in the nation-building process, Smt. Sitharaman said, “With 51% of total loans sanctioned so far going to the SC/ST/OBC category, the Pradhan Mantri Mudra Yojana stands for social justice in action and embodies the true spirit of ‘Sabka Saath, Sabka Vikas’, as envisioned by the Hon’ble Prime Minister.”

On the occasion, Union Minister of State (MoS) for Finance Dr Bhagwat Kisanrao Karad said, “The driving force behind launching Pradhan Mantri Mudra Yojana (PMMY) has been to provide institutional credit to micro, small and medium enterprises in a hassle free/seamless manner.”

“By providing assistance to 34.42 crore account holders, the scheme has been successfully reaching out to aspiring entrepreneurs, over the last seven years, since inception,” the MoS Added.

On the issue of credit flow, the MoS said, “The other noteworthy focus of PMMY has been able to extend credit to growing number of beneficiaries from the ‘aspirational districts’ identified by Niti Aayog, thus enabling flow of credit to these credit-starved districts.”

Implementation of Financial Inclusion (FI) programme in the country is based on three pillars, namely, Banking the Unbanked, Securing the Unsecured and Funding the Unfunded. Under this ongoing programme, these three objectives are being achieved through leveraging technology and adopting multi-stakeholders’ collaborative approach, while serving the unserved and underserved as well.

One of the three pillars of FI – Funding the Unfunded, is reflected in the FI ecosystem through PMMY, which is being implemented with the objective to provide access to credit for small entrepreneurs. PMMY focuses on the financial needs of all stakeholders, ranging from budding entrepreneurs to the hard-working farmers, through various initiatives of the scheme.

It is a key initiative towards providing financial support to the marginalized and hitherto socio-economically neglected classes, Pradhan Mantri MUDRA Yojana (PMMY) has given wings to the dreams and aspirations of millions, along with a feeling of self-worth and independence.

Let us glance at the major aspects of this PMMY and its achievements over the last 7 years:

Major aspects of Pradhan Mantri Mudra Yojana (PMMY):

• Under PMMY loans are provided up to Rs. 10 Lakh through Member Lending Institutions (MLIs) viz; Banks, Non Banking Financial Companies (NBFCs), Micro Financial Institutions (MFIs), other financial intermediaries, in three categories namely, ‘Shishu’, ‘Kishore’ and ‘Tarun’ which signifies the stage of growth or development and funding needs of the borrowers.
• Shishu : covering loans up to  Rs. 50,000/-
• Kishore : covering loans above  Rs. 50,000/- and up to Rs. 5 lakh
• Tarun : covering loans above  Rs. 5 lakh and up to Rs. 10 lakh

• With an objective to promote entrepreneurship among the new generation aspiring youth, it is ensured that more focus is given to Shishu category loans followed by Kishore and Tarun categories.

• Within the framework and overall objective of development and growth of micro enterprises sector under Shishu, Kishore and Tarun, the products being offered by MUDRA are so designed, to meet requirements of different sectors / business activities.

• 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 in terms of RBI guidelines.  In case of working capital facility, interest is charged only on money held overnight by borrower.

Achievements of this Scheme (As on 25.03.2022)

• More than 34.42 crore loans for an amount of Rs 18.60 lakh crore have been sanctioned since launch of the scheme (as on 25.03.2022). Approximately 22% of the totalloans have been sanctioned to New Entrepreneurs.
• 4.86 crore PMMY loans accounts with sanctioned amount of Rs. 3.07 lakh crore extended in current FY (As on 25.03.2022)
• Approximate 68% loans of the totalnumber ofloans have been sanctioned to Women Entrepreneurs
• The average ticket size of the loans is about Rs 54,000/-
• 86% of the loans are of ‘SHISHU’ category
• Almost 22% of the loans have been given to New Entrepreneurs
• About 23% of the loans have been given to SCs and STs borrowers; About 28% of the loans have been given to OBCs borrowers (Total 51% loans have been sanctioned toSC/ST/OBC categories of borrowers)
• About 11% of the loans have been given to Minority community borrowers

Category-wise breakup:-

Targets have been achieved since the inception of the Scheme barring F.Y. 2020-21 due to Covid-19 pandemic. Year-wise sanction amount is as follows:-

   *Provisional

Other relevant information

Interest Subvention of 2% on prompt repayment of Shishu loans extended under PMMY for a period of 12 months to all eligible borrowers

• Announced by Union Finance Minister on 14.05.2020 under Atma Nirbhar Bharat Package (ANBP), the Scheme has been formulated as a specific response to an unprecedented situation and aims to alleviate financial stress for borrowers at the ‘bottom of the pyramid’ by reducing their cost of credit.
• Union Cabinet approved the Scheme on 24th June 2020.
• Rs. 775 crore have been released to Small Industries Development Bank of India (SIDBI).
• Implementation of Scheme : By all categories of MLIs viz. Public Sector Banks (PSBs), Private Sector Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs).

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