Mudra: Rs. 1 Lakh Cr. More Has to be Lent

Prelims level : Economy Mains level : Indian Economy
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  • Despite all the push given by the Central government to the Pradhan Mantri MUDRA Yojana and the ‘MSME loan in 59 minutes’ scheme, banks are still struggling to meet the Rs 3 lakh crore target for lending Mudra loans, as only about Rs 2 lakh crore have been disbursed so far.


  • The government, in Budget 2018-19, said it intends to disburse loans of up to Rs 3 lakh crore in the current fiscal. However, as on February 22, the total loan disbursed under the Micro Units Development and Refinance Agency Ltd (Mudra) scheme stood at Rs 2,02,668.9 crore as against sanctioned amount of Rs 2,10,759.51 crore.
  • The scheme was launched on April 8, 2015, for providing loans up to Rs 10 lakh to the non-corporate, non-farm, small/micro enterprises. Loans under Mudra are given under the Shishu (up to Rs 50,000), Kishore (Rs 50,000 to Rs 5 lakh) and Tarun (Rs 5-10 lakh) categories.
  • In 2017-18, lending at Rs 2,46,437.40 crore had exceeded the target. In fact, MUDRA lending had exceeded targets in all the previous years.
  • However, with less than a month left in the current fiscal and banks falling short of the target this year, the department of financial services (DFS) is already putting pressure on them. And also that the increasing number of banks under Prompt Corrective Action and rising bad loans under the MUDRA scheme have dragged the lending.
  • NPAs of state-run banks under the Mudra scheme rose to Rs 7,277 crore as of March 2018, against Rs 3,790 crore in March 2017 and Rs 597 crore in March 2016.


  • Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme of Government of India to “fund the unfunded” by bringing such enterprises to the formal financial system and extending affordable credit to them. It enables a small borrower to borrow from all Public Sector Banks such as PSU Banks, Regional Rural Banks and Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions (MFI) and Non-Banking Finance Companies (NBFC) for loans upto Rs 10 lakhs for non-farm income generating activities.


  • Any Indian Citizen who has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading or service sector and whose credit need is less than Rs 10 lakh can approach either a Bank, MFI, or NBFC for availing of Micro Units Development & Refinance Agency Ltd. (MUDRA) loans under Pradhan Mantri Mudra Yojana (PMMY).
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