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By [Author Name]
The disbursal of small business loans under the Pradhan Mantri Mudra Yojana (PMMY) has experienced a notable 38% increase in the first half of the current financial year (FY23) ending in September 2023, compared to the same period in the previous year.
This growth is attributed primarily to the increasing demand for the second category of Kishore loans (ranging from ₹50,000 to ₹5 lakh), which reflects heightened economic optimism and activity.
Bibekananda Panda, Senior Economist at State Bank of India, opines that robust economic activity and positive business sentiment are propelling the expansion of Mudra loans.
The borrower-friendly atmosphere and the ready availability of funds without collateral have further contributed to the surge in demand for small-value credit.
- Mudra loans, which are collateral-free loans up to ₹10 lakh, are provided by banks, non-banking financial companies (NBFCs), microfinance institutions (MFIs), and other financial intermediaries under the Mudra scheme.
- These loans are backed by the Credit Guarantee Fund for Micro Units (CGFMU).
- Lenders, particularly public sector banks, adhere to underwriting standards to ensure that the borrowed funds are used for their intended purposes.
Three Categories
Mudra loans are extended in three categories:
- Shishu (up to ₹50,000)
- Kishore (above ₹50,000 and up to ₹5 lakh)
- Tarun (above ₹5 lakh and up to ₹10 lakh)
In the financial year ended March 2023, over ₹4.50 lakh crore PMMY loans were disbursed, compared to ₹3.31 lakh crore in FY22.
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