Pradhan Mantri MUDRA Yojana (PMMY), launched on April 8, 2015, has completed seven years. 

What is Pradhan Mantri MUDRA Yojana?

• Pradhan Mantri Mudra Yojana an important aspect of financial inclusion is enabling the flow of credit to small businesses. In pursuance of the announcement in the Union Budget 2015-16, the Micro Units Development Finance Agency (MUDRA) Ltd was established as a wholly owned subsidiary of Small Industries Development bank of India (SIDBI).

• The Pradhan Mantri MUDRA Yojana (PMMY) was launched on April 8, 2015 for providing loans up to Rs 10 lakh to any individual including women, proprietary concern, partnership firm, private limited company or any other entity.

• These loans are given by commercial banks, regional rural banks (RRBs), Small Finance Banks, Micro Finance Institutions (MFIs) and Non-Banking Financial Companies (NBFCs).

• Under the aegis of PMMY, MUDRA has created three products namely, ‘Shishu’, ‘Kishore’ and ‘Tarun’ to signify the stage of growth or development and funding needs of the beneficiary micro unit or entrepreneur.

i) Shishu: covering loans upto Rs 50,000.

ii) Kishor: covering loans above Rs 50,000 and up to Rs 5 lakh.

iii) Tarun: covering loans above Rs 5 lakh and up to Rs 10 lakh.

• With an objective to promote entrepreneurship among the new generation aspiring youth, it is ensured that more focus is given to Shishu category loans followed by Kishore and Tarun categories.

• Within the framework and overall objective of development and growth of micro enterprises sector under Shishu, Kishore and Tarun, the products being offered by MUDRA are designed to meet requirements of different sectors/business activities.

• Loans under PMMY 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 the borrower.

How PMMY helps in financial inclusion?

• Implementation of financial inclusion programme in the country is based on three pillars — Banking the Unbanked, Securing the Unsecured and Funding the Unfunded. 

• ‘Funding the Unfunded’, is reflected in the financial inclusion programme through Pradhan Mantri MUDRA Yojana (PMMY), which is being implemented with the objective to provide access to credit for small entrepreneurs. 

• PMMY focuses on the financial needs of all stakeholders, ranging from budding entrepreneurs to the hard-working farmers, through various initiatives of the scheme.

• It is a key initiative towards providing financial support to the marginalised and hitherto socio-economically neglected classes, PMMY has given wings to the dreams and aspirations of millions, along with a feeling of self-worth and independence.

Achievements of PMMY:

• According to the finance ministry, Rs 18.60 lakh crore have been sanctioned to more than 34.42 crore loan accounts since launch of the scheme for the creation of income generating activities.

• More than 68 per cent of the loan accounts have been sanctioned to women and 22 per cent of the loans have been given to new entrepreneurs who had not availed any loan since the inception of the scheme.

• The scheme has helped in creating an enabling environment particularly for small businesses and has helped generate large-scale employment opportunities at the grass roots level. 

• About 23 per cent of the loans have been given to SC/ST borrowers. About 28 per cent of the loans have been given to OBC borrowers. Total 51 per cent loans have been sanctioned to SC/ST/OBC categories of borrowers.

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