Launch and Aim:
Pradhan Mantri Mudra Yojana (PMMY) was launched by the government in 2015 to provide loans up to Rs. 10 lakh to the non-corporate, non-farm small/micro-enterprises.
Funding Provision:
- MUDRA, which stands for Micro Units Development & Refinance Agency Ltd., is a financial institution set up by the Government.
- It funds the non-corporate small business sector through various last-mile financial institutions like Banks, Non-Banking Financial Companies (NBFCs), and Micro Finance Institutions (MFIs).
- MUDRA does not lend directly to micro-entrepreneurs/individuals.
Three Products:
MUDRA has created three products i.e. ‘Shishu’, ‘Kishore’, and ‘Tarun’ as per the stage of growth and funding needs of the beneficiary micro unit.
- 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.
Loans under this scheme are collateral-free loans.
Achievements:
- Loans have been given to disadvantaged sections of society such as women entrepreneurs, SC/ST/OBC borrowers, Minority community borrowers, etc. The focus has also been on new entrepreneurs.
- As per a survey conducted by the Ministry of Labour and Employment, PMMY helped in the generation of 1.12 crore net additional employment from 2015 to 2018.
- Out of the 1.12 crore estimated increase in employment, women accounted for 69 lakh (62%).
The PMMY has been expanded over time:
- In 2016-17, the scheme was expanded to cover activities related to agriculture, such as fishing, dairy, and food processing.
- In 2017-18, loans for tractors and power tillers became eligible under PMMY, with a maximum limit of Rs. 10 lakhs.
- From 2018-19 onwards, loans for two-wheelers for commercial use were included in PMMY.
Challenges faced
- In public sector banks, the percentage of Mudra loans that become non-performing assets has sharply increased (NPAs).
- The primary cause of this development is how Covid has affected borrowers’ salaries and ability to repay loans.
