About Rs 18.60 trillion has been sanctioned to 344 million borrowers under the Pradhan Mantri Mudra Yojana (PMMY) in 7 years since the launch of the scheme.
However, penalties under the scheme fell to a four-year low at 3.10 trillion rupees in the financial year 2021-22 for 48.6 million borrowers. Of this amount, Rs 3.02 trillion was disbursed during the year.
In the last financial year, Rs 3.22 trillion was sanctioned to 48.9 million borrowers, of which Rs 3.12 trillion was disbursed. The eligibility of these borrowers for loans under the Emergency Line of Credit Guarantee Scheme (ECLGS) is likely one of the reasons for the drop in penalties. The government had also set the loan disbursement target under the program at 3 trillion rupees for the current financial year, compared to 3.120 billion rupees disbursed in FY21.
Marking the seventh anniversary of the Mudra scheme, Prime Minister Narendra Modi tweeted that the scheme has provided an opportunity for countless Indians to showcase their entrepreneurial skills and become job creators.
Finance Minister Nirmala Sitharaman, in a statement, said the Mudra program has helped create an enabling environment, especially for small businesses, and helped generate large-scale employment opportunities at the local level.
“Over 68% of the loan accounts were granted to women and 22% were granted to new entrepreneurs who had not received any loans since the inception of the program,” Sitharaman said.
Under the PMMY, credits of up to Rs 10 lakh are provided by banks and non-bank financial companies for entrepreneurial activities to small businesses, including for new businesses in sectors such as manufacturing, trading , services and activities related to agriculture. Loans are sanctioned in three categories “Shishu” (covering loans up to Rs 50,000); “Kishore” (covering loans of Rs 50,000 to Rs 5 lakh) and “Tarun” (covering loans of Rs 5 lakh to Rs 10 lakh).
According to data shared by the government, the average loan size under the scheme is Rs 54,000 and 86% of the loans fall under the “Shishu” category. About 22% of the loans were granted to new entrepreneurs and about 68% of the total number of loans were granted to women.
Even though the penalties under the program have been impressive, non-performing loans have increased over the years. In FY 2020-21, total NPA increased to Rs 34,090 crore from Rs 26,078 crore in FY 2020. Bad debt vs. disbursement percentage increased to 3.61% during in FY21, compared to 2.53 in FY20.