More than 40.82 crore loans amounting to Rs 23.2 lakh crore were sanctioned under Pradhan Mantri MUDRA Yojana (PMMY) since its inception eight years ago in 2015. The scheme eased collateral free access to credit in a seamless manner to micro enterprises and helped in generation of large-scale employment opportunities at grassroots level and proved a game changer while boosting Indian economy.
The Pradhan Mantri MUDRA Yojana (PMMY), popularly known as MUDRA Scheme, was launched on 8th April 2015 with the aim to facilitate easy collateral-free micro credit of up to Rs 10 lakh to non-corporate, non-farm small and micro entrepreneurs for income generating activities.
The loans under scheme are provided by Member Lending Institutions (MLIs), i.e., Banks, Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) and other financial intermediaries.
The scheme has enabled easy and hassle-free access to credit to micro-enterprises and has helped many young entrepreneurs establish their businesses. About 68% 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 the budding entrepreneurs of the country has led to innovation and sustained increase in per capita income and has helped in the generation of large-scale employment opportunities at the grassroots level.
The scheme aims to provide collateral free access to credit in a seamless manner to micro enterprises in the country. It has brought the unserved and under-served sections of the society within the framework of institutional credit. This has led millions of MSME enterprises in the formal economy and has helped them to get out of the clutches of moneylenders offering very high-cost funds.
The financial inclusion programme in India is based on three pillars – Banking the Unbanked, Securing the Unsecured and Funding the Unfunded. One of the three pillars of FI – Funding the Unfunded, is reflected in the Financial Inclusion ecosystem through PMMY, which is being implemented with the objective to provide access to credit for small entrepreneurs.
The loans have been divided into three categories based on the need for finance and stage in maturity of the business. These are Shishu (loans up to ₹50,000/-), Kishore (loans above ₹50,000/- and up to ₹5 lakh), and Tarun (loans above ₹5 lakh and up to ₹10 lakh).
| Category | No. of Loans (%) | Amount Sanctioned (%) |
| Shishu | 83% | 40% |
| Kishore | 15% | 36% |
| Tarun | 2% | 24% |
| Total | 100% | 100% |
Loans are provided to meet both term loan and working capital components of financing for income generating activities in manufacturing, trading and service sectors, including activities allied to agriculture such as poultry, dairy, beekeeping, etc.
The rate of interest is decided by lending institutions in terms of RBI guidelines. In case of working capital facility, interest is charged only on money held overnight by borrower.
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