Pradhan Mantri Mudra Yojana - Completes 10 Years

The Pradhan Mantri MUDRA Yojana (PMMY), launched by the Prime Minister on April 8, 2015, has played a pivotal role in empowering non-corporate, non-farm small and micro enterprises by providing loans of up to ₹10 lakh to income generating micro enterprises engaged in the non-farm sector in manufacturing, trading or service sectors including activities allied to agriculture such as poultry, dairy, beekeeping, etc. The Scheme provides financial assistance extended by Member Lending Institutions to the non-corporate, non-farm sector income generating activities of micro and small entities.

Mudra Yojana

MUDRA, which stands for Micro Units Development & Refinance Agency Ltd, is a financial institution set up by the Government of India under PMMY for the development and refinancing of micro-unit enterprises. PMMY aims to provide financial inclusiveness and support to the marginalized and hitherto socio-economically neglected classes. PMMY has given wings to the dreams and aspirations of millions, along with a feeling of self-worth and independence.

These micro and small entities comprise of millions of proprietorship / partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits / vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others.

The loans under Pradhan Mantri Mudra Yojana can be availed through eligible Member Lending Institutions (MLIs), which include:

Public Sector Banks
Private Sector Banks
State operated cooperative banks
Rural banks from regional sector
Micro Finance Institution (MFI)
Non-Banking Finance Company (NBFC)
Small Finance Banks (SFBs)
Other financial intermediary approved by Mudra Ltd. as member financial institutions

Need for the MUDRA Yojana

India is a young country brimming with youthful enthusiasm and aspirations. In order to provide a fertile ground for sowing the seeds of India’s development it is very important to harness this innovative zeal of young India which can provide new-age solutions to existing gaps in the economic ecosystem of the country. Understanding the need to harness the latent potential of entrepreneurship in India, the Union Government launched the Pradhan Mantri MUDRA Yojana.

Eligible borrowers:

Individuals
Proprietary concern.
Partnership Firm.
Private Ltd. Company.
Public Company.
Any other legal forms.

Note 01:The applicant should not be a defaulter to any bank or financial institution and should have a satisfactory credit track record.

Note 02: The individual borrowers may be required to possess the necessary skills/experience/ knowledge to undertake the proposed activity.

Note 03: The need for educational qualification, if any, is assessed based on the nature of the proposed activity and its requirement.

MUDRA Loans: Categories

Under PMMY collateral- free loans up to Rs. 20 Lakh are extended by Member Lending Institutions (MLIs) viz Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) etc. The loans are given for income-generating activities in manufacturing, trading, and services sectors and for activities allied to agriculture.

MUDRA loans, since October 2024, were offered in four categories namely, ‘Shishu’, ‘Kishore’ and ‘Tarun’, and the newly added category ‘Tarun Plus’ 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
Tarun Plus: Rs. 10 lakh and up to Rs. 20 lakh

Mudra Card

MUDRA Card is an innovative credit product wherein the borrower can avail of credit in a hassle-free and flexible manner. It provides a facility of working capital arrangement in the form of an overdraft facility to the borrower. Since the MUDRA Card is a RuPay debit card, it can be used for drawing cash from an ATM or Business Correspondent or making purchases using a Point of Sale (POS) machine. Facility is also there to repay the amount, as and when, surplus cash is available, thereby reducing the interest cost.

MUDRA App- “MUDRA MITRA”

MUDRA MITRA is a mobile phone application available in the Google Play Store and Apple App Store, providing information regarding ‘Micro Units Development and Refinance Agency Ltd. (MUDRA)’ and its various products/ schemes. It will guide a loan seeker to approach a Banker in availing MUDRA loan under PMMY. Users can also access useful loan-related material including sample loan application forms in this app.

Steps taken to improve implementation of the Scheme:

Handholding support for facilitating the submission of loan applications
Provision for online applications through PSBloansin59minutes and Udyamimitra portals.
Intensive publicity campaigns for increased visibility of the scheme amongst the stakeholders
Simplification of application forms
Nomination of MUDRA Nodal Officers in Public Sector Banks (PSBs)
Periodic monitoring of the performance of PSBs concerning PMMY
Interest Subvention of 2% on prompt repayment of Shishu loans extended under PMMY for 12 months to all eligible borrowers.
Announced by the Union Finance Minister on 14.05.2020 under the Aatmanirbhar Bharat Package, 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.

Mudra Scheme and Upliftment:

The scheme has been a game-changer for small traders, startups, and self-employed individuals, particularly in food processing, handicrafts, retail trade, agriculture-based enterprises, and services. It also prioritizes support for women entrepreneurs, Scheduled Castes, Scheduled Tribes, Other Backward Classes, and persons with disabilities.

The scheme has significantly contributed to reducing unemployment and driving grassroots entrepreneurship, especially in rural areas. With regular monitoring and active support from banks, the state government has ensured the timely and targeted delivery of benefits.

The Pradhan Mantri Mudra Yojana (PMMY) has significantly boosted financial inclusion and entrepreneurship in India. It has facilitated access to loans for small and micro enterprises, particularly in the non-corporate, non-farm sector, and has supported women and marginalized communities. The scheme has sanctioned over 52 crore loans, worth ₹32.61 lakh crore, and has been credited with creating a nationwide entrepreneurial revolution.

MUDRA Scheme in Uttar Pradesh:

Uttar Pradesh has emerged as a leading state in implementing the scheme, empowering over 47 lakh entrepreneurs in FY 2024-25 alone.

Under the guidance of PM Modi, Yogi Adityanath’s government has vigorously implemented the scheme, making it a model for other states.

Backed by the banking ecosystem and driven by the determination of small entrepreneurs, the Mudra Yojana has become a key pillar of economic empowerment in Uttar Pradesh, paving the path to self-reliance for millions.

According to official data, as of March 21, 2024, a total of ₹49,501 crore was disbursed in Uttar Pradesh through Mudra loans. Of this, ₹37,875 crore went to 30.76 lakh individuals through banks, while ₹11,626 crore was disbursed by non-banking financial companies (NBFCs) to 16.16 lakh beneficiaries.

Key Achievements of the Scheme:

Financial Inclusion: PMMY has successfully extended credit to millions of individuals and small businesses who were previously excluded from formal financial systems, often relying on informal lenders.

Entrepreneurship Growth: The scheme has been instrumental in fueling a nationwide entrepreneurial revolution, with businesses expanding to small towns and villages.

Support for Women and Marginalized Groups: A significant portion of the loans has been disbursed to women entrepreneurs (approximately 69% of the total loans) and to borrowers from SC/ST/OBC categories.

Job Creation: The shift from job seeking to job creation is evident, as more and more individuals are taking charge of their businesses.

Growth of Micro and Small Enterprises (MSMEs): The scheme has played a key role in the growth of MSMEs, with MSME lending surging from ₹8.51 lakh crore in FY14 to ₹27.25 lakh crore in FY24.

Financial Support: PMMY has provided ₹33 lakh crore in loans without the need for guarantees, a significant amount that surpasses any other financial support extended to Indian citizens.

Increased Credit Availability: The scheme has made it easier for micro and small entrepreneurs to access credit, even those with limited collateral.

Economic Growth: PMMY has contributed to overall economic growth by supporting the development of micro and small businesses, which are major contributors to India’s economy.

Social Impact: The scheme has empowered individuals, particularly women and those from marginalized communities, by providing them with the financial resources they need to start and grow their businesses.

Financial Literacy: PMMY has helped increase financial literacy among the target population, as borrowers have gained experience in managing their finances and accessing formal financial services.

Key aspects of the MUDRA scheme's mission:

Promoting entrepreneurship: The scheme encourages individuals and businesses to start or expand their micro-enterprises.

Providing financial inclusion: It aims to make credit accessible to those who may not have traditionally been able to access formal financial services.

Supporting various sectors: The scheme supports businesses in manufacturing, trading, and services, including activities allied to agriculture.

Facilitating micro-credit: It provides loans through member lending institutions (MLIs), including banks and non-banking financial companies.

Simplifying access to credit: By reducing the need for collateral and streamlining the application process, the scheme makes it easier for micro-entrepreneurs to obtain loans.

Refinancing and development: MUDRA also plays a role in refinancing and developing the micro-enterprise sector by supporting lending institutions.

Creating a sustainable and value-based entrepreneurial culture: The scheme aims to foster a positive and lasting impact on the entrepreneurial landscape.

In conclusion, the Pradhan Mantri Mudra Yojana has been a transformative initiative in India, promoting financial inclusion, entrepreneurship, and economic growth, especially for the small and micro-enterprise sectors.

Disclaimer: the above-mentioned article is based on information from the Press Information Bureau of India and the Hindustan Times.

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Pradhan Mantri Mudra Yojana - Completes 10 Years

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