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PM Mudra Yojana completes 8 years

GS Paper 3

 Syllabus: Inclusive growth


Source: PIB

 Context: The Prime Minister has lauded Mudra Yojana on the completion of 8 years. The yojana has played a vital role in funding the unfunded and ensuring a life of dignity as well as prosperity for countless Indians


Achievements of PM Mudra Yojana:

  • Loan sanctioned: About ₹23 lakh crore has been sanctioned in nearly 41 crore loan accounts
  • Inclusive growth: About 69% of accounts under the scheme belong to women entrepreneurs and 51% of accounts belong to entrepreneurs of SC/ST and OBC categories
  • Easy availability of credit to budding entrepreneurs: Approximately 21% of the total loans have been sanctioned to New Entrepreneurs.
  • Employment Generation: As per a survey conducted by the Ministry of Labour and Employment, PMMY helped in generating over 1 crore net additional employment from 2015 to 2018, out of which women accounted for 69 lakh (62%)
Feature of the schemeDescription
Full nameMudra – Micro Units Development & Refinance Agency Ltd
Launch Year2015
Ministry Department of Financial Services, Ministry of Finance
AimProviding loans up to Rs. 10 lakh to non-corporate, non-farm small/micro-enterprises
Three pillars of the scheme1.      Banking the Unbanked

2.      Securing the Unsecured

3.      Funding the Unfunded

Funding ProvisionMUDRA, a financial institution set up by the government, provides funding to the small business sector through institutions like Scheduled commercial banks, NBFCs, and MFIs.



MUDRA is a refinancing Institution. MUDRA does not lend directly to micro-entrepreneurs / individuals.

Loan Products1.      Shishu (up to Rs. 50,000)

2.      Kishore (above Rs. 50,000 and up to Rs. 5 lakh)

3.      Tarun (above Rs. 5 lakh and up to Rs. 10 lakh)

CollateralLoans under this scheme are collateral-free loans
Target BeneficiariesDisadvantaged sections of society such as women entrepreneurs, SC/ST/OBC borrowers, minority community borrowers, and new entrepreneurs
Products and ServicesLoans can be used for income-generating activities in the manufacturing, trading, services sector, and agriculture
ExpansionPMMY has been expanded over time to cover activities related to agriculture, such as fishing, dairy, and food processing, and loans for tractors and power tillers, and two-wheelers for commercial use were included in PMMY
Steps taken to improve the schemeudyamimitra portal (for online applications); End-to-end digital lending for automated sanctions under PMMY (by some banks); Nomination of Mudra Nodal Officers in PSBs; Interest Subvention of 2% on prompt repayment of Shishu loans



Challenges faced by the scheme:

  • High non-performing assets or bad loans
  • Limited funds that cannot keep up with the pace of demand
  • Regional disparities in the distribution of benefits
  • Lack of financial literacy among beneficiaries leading to defaults
  • Limited outreach to rural entrepreneurs
  • Collateral requirements for loans above a certain amount make it difficult for many small enterprises to access credit
  • Loan size limitations of up to Rs. 10 lakhs, which is inadequate for many small enterprises with higher capital requirements.



Overall, the MUDRA scheme has been successful in providing credit to small entrepreneurs. However, it faces some significant challenges that need to be addressed to make it more effective and inclusive.


Insta Links

Pradhan Mantri MUDRA Yojana


Mains Links

What are the objectives of the Pradhan Mantri Mudra Yojana (PMMY)? Should the success of PMMY be measured in terms of the quantum of loans disbursed? Comment. (15M)


Prelims Links

Pradhan Mantri MUDRA Yojana is aimed at ( UPSC 2016)

(a) bringing small entrepreneurs into the formal financial system
(b) providing loans to poor farmers for cultivating particular crops
(c) providing pensions to old and destitute persons
(d) funding the voluntary organizations involved in the promotion of skill development and employment generation

Ans: A