PM Mudra Yojana

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Context: The Reserve Bank of India (RBI) has expressed concern over rising bad loans from Pradhan Mantri MUDRA Yojana (PMMY), a scheme announced by Prime Minister Narendra Modi in April 2015, which offers faster credit, with ticket sizes starting from ₹50,000 and going up to ₹10 lakh, to small businesses.

Prelims: Economic and Social Development Sustainable Development, Poverty, Inclusion, Demographics, Social Sector initiatives, etc.


  • GS II- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
  • GS III-
    • Indian Economy and issues relating to planning, mobilization of resources, growth, development, and employment.
    • Inclusive growth and issues arising from it.
    • Government Budgeting.

Pradhan Mantri Mudra Yojana (PMMY): 

  • Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Hon’ble Prime Minister on April 8, 2015, for providing loans up to 10 lakh to the non-corporate, non-farm small/micro-enterprises.
  • These loans are classified as MUDRA loans under PMMY.
  • These loans are given by Commercial Banks, RRBs, Small Finance Banks, Cooperative Banks, MFIs and NBFCs.
  • The borrower can approach any of the lending institutions mentioned above or can apply online through this portal.
  • Under the aegis of PMMY, MUDRA has created three products namely 'Shishu', 'Kishore' and 'Tarun' to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur and also provide a reference point for the next phase of graduation/growth.
  • Mudra loan is extended for a variety of purposes which provides income generation and employment creation in Manufacturing, Services, Retail, and Agri. Allied Activities.

Rising NPAs: 

  • The scheme which offers faster credit, with ticket sizes starting from ₹50,000 and going up to ₹10 lakh, to small businesses would have lifted many beneficiaries out of poverty, there have been some concerns at the growing level of non-performing assets among these borrowers.
  • The government had in July informed Parliament that total NPA in the Mudra scheme of over ₹3.21 lakh crore has jumped to 2.68% in FY19 from 2.52% in FY18.
  • Since the inception of the scheme, over 19 crore loans have been extended under the scheme up to June 2019. Of the total, 3.63 crore accounts are in default as of March 2019.
  • However, according to an RTI reply, the bad loans in the scheme soared a whopping 126% in FY19, jumping by ₹9,204.14 crore to ₹16,481.45 crores in FY19 over the previous year.

With stress in such loans increasing, the central bank is set to ask bankers to monitor such loans closely as unsustainable credit growth in the sector could risk the system.

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