In a landmark decade for the Pradhan Mantri Mudra Yojana (PMMY), over 520 million loans worth ₹33.65 trillion have been sanctioned, with a remarkable ₹32.87 trillion disbursed, according to Department of Financial Services (DFS) Secretary M. Nagaraju. Launched on April 8, 2015, this micro-finance initiative has played a pivotal role in extending collateral-free institutional credit to micro and small businesses across India, especially in small towns and villages where first-time entrepreneurs are eager to shape their destinies.
A Focus on Social Inclusion and Economic Empowerment
The PMMY has emerged as a potent tool for financial inclusion and economic growth. A key highlight of the scheme is its focus on empowering women and socially disadvantaged groups:
- Women Entrepreneurs: Approximately 68% of the total loans have been sanctioned to women, underscoring the scheme’s commitment to female empowerment.
- SC/ST/OBC Borrowers: Around 50% of the loans have been granted to borrowers from these communities, with many of these beneficiaries also being women.
Maintaining a Healthy Loan Repayment Culture
Despite the sheer volume of loans disbursed, the scheme has maintained a commendably low Non-Performing Assets (NPA) ratio. According to Nagaraju, the average NPA stands at 3.6%, attesting to the robust repayment behavior among borrowers. For instance, the gross NPA in FY25 was recorded at 2.21%, slightly up from 2.10% in the previous year—an indicator of strong financial discipline among beneficiaries.
Continuous Growth and Expansion
Every year, the PMMY scheme adds between 500,000 and 600,000 new loan accounts, with annual loan sanctions estimated at around ₹5-6 trillion. Looking ahead to FY26, the recently launched Tarun-plus programme is set to further expand the scheme’s outreach, offering loans of up to ₹20 lakh. Since its inception in October 2024, Tarun-plus has already seen the opening of 22,557 loan accounts with loan sanctions totaling ₹3,190 crore.
The entrepreneurial spirit among the nation’s small business community is unmistakable. In 2015, the average loan value under the PMMY was around ₹40,000; today, it has grown to roughly ₹1.5 lakh, reflecting both increased business confidence and scaling-up of enterprises.
Diverse Loan Categories and Support Mechanisms
PMMY supports a range of business needs through four distinct loan categories:
- Shishu: Loans up to ₹50,000.
- Kishor: Loans between ₹50,000 and ₹5 lakh, which have seen a surge in growth from 5.9% in FY16 to 44.4% in FY25.
- Tarun: Loans between ₹5 lakh and ₹10 lakh.
- Tarun Plus: Loans up to ₹20 lakh for entrepreneurs with a proven repayment track record under the Tarun category.
These loans cover income-generating activities in manufacturing, trading, services, and allied agricultural sectors. Additionally, the Credit Guarantee Fund for Micro Units (CGFMU), managed by the National Credit Guarantee Trustee Company (NCGTC) Ltd, ensures that Member Lending Institutions (MLIs) extending these loans are provided with a guarantee cover, further enhancing the scheme’s credibility and reach.
Impact on Employment and MSME Growth
The impact of the PMMY extends beyond entrepreneurship. The think tank SKOCH, in its report “Outcomes of ModiNomics 2014-24,” highlighted that the scheme has generated an average of 25.2 million steady and sustainable jobs per year since 2014, contributing to at least 51.4 million person-years of employment annually.
Furthermore, a recent report by the State Bank of India (SBI) underscores the transformative effect of the Mudra scheme, noting that MSME lending surged from ₹8.51 trillion in FY14 to ₹27.25 trillion in FY24. This momentum is expected to carry MSME lending past ₹30 trillion in FY25, driven by the significant credit flow catalyzed by the PMMY.
Conclusion
As PM Mudra Yojana celebrates its 10th anniversary, its legacy is evident in the robust expansion of the nation’s micro, small, and medium enterprises (MSMEs), and the groundbreaking impact on financial inclusion, especially among women and marginalized communities. With continued enhancements and the launch of innovative programmes like Tarun-plus, the scheme is poised to further revolutionize the entrepreneurial landscape and contribute significantly to India’s economic growth in the years to come.
