The Ministry of Finance has announced that the Pradhan Mantri MUDRA Yojana (PMMY) has successfully granted 41 crore loans amounting to ₹23.2-lakh-crore over the past eight years. The scheme has been particularly effective in promoting entrepreneurship, with 68% of accounts belonging to women entrepreneurs and 51% belonging to entrepreneurs from SC/ST and OBC categories. The availability of easy credit to budding entrepreneurs has led to innovation and a sustained increase in per capita income. The PMMY scheme aims to provide loans of up to ₹10 lakh to small entrepreneurs to start or expand their businesses, demonstrating the government’s success in promoting financial inclusion and entrepreneurship in India.
Key points of the Pradhan Mantri MUDRA Yojana (PMMY):
- Launched on April 08, 2015, by the Government of India
- Aims to provide collateral-free microcredit up to Rs 10 lakh to non-corporate, non-farm small and micro-enterprises
- Part of the Micro Units Development and Refinance Agency (MUDRA) initiative to support small and micro enterprises across the country
- Loans are provided by various financial intermediaries such as banks, non-banking financial companies (NBFCs), and microfinance institutions (MFIs)
- Loans are categorized into three types based on the borrower’s need for finance and the stage of the business’s maturity: 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)
- Loans are provided for both term loan and working capital components of financing for income-generating activities in manufacturing, trading, and service sectors, including activities related to agriculture such as poultry, dairy, and beekeeping
- Interest rates are determined by the lending institutions as per the guidelines of the Reserve Bank of India (RBI)
- The PMMY scheme has shown significant success in promoting entrepreneurship, with 68% of accounts under the scheme belonging to women entrepreneurs and 51% belonging to entrepreneurs from SC/ST and OBC categories
- The availability of easy credit to budding entrepreneurs has led to innovation and a sustained increase in per capita income
- The PMMY scheme aims to fulfill one of the three pillars of financial inclusion, which is “Funding the Unfunded,” along with “Banking the Unbanked” and “Securing the Unsecured”
- The scheme has proven to be a successful initiative in promoting entrepreneurship and financial inclusion among women and underprivileged categories.
The loans under PMMY are provided for both term loan and working capital components of financing for income-generating activities in manufacturing, trading, and service sectors, including activities related to agriculture such as poultry, dairy, and beekeeping. The lending institutions determine the interest rates as per the guidelines of the Reserve Bank of India (RBI). In the case of a working capital facility, interest is charged only on the amount held overnight by the borrower. The PMMY is designed to fulfill one of the three pillars of financial inclusion, which is “Funding the Unfunded,” along with “Banking the Unbanked” and “Securing the Unsecured.”
