Pradhan Mantri Mudra Yojana (PMMY) completes 8 years
The Union Finance Ministry launched the Pradhan Mantri Mudra Yojana (PMMY) in 2015.
Under this scheme, loans are provided to small and micro entrepreneurs of non-corporate and non-agriculture sector for income generating activities. In this, easy collateral-free micro loans up to Rs.10 lakh are made available.
MUDRA (Micro Units Development & Refinance Agency Limited) Bank, is a refinanced institution.
Under this scheme, member lending institutions such as banks, non-banking financial companies (NBFCs), micro finance institutions (MFIs) and other financial intermediaries provide loans.
Loan applicants are not required to deposit any collateral /security. The interest rate is determined by the lending institutions as per the guidelines of the Reserve Bank of India.
The loans provided are divided into three categories.
Achievements of PMMY (up to March 2023):
- Around Rs 23.2 lakh crore has been sanctioned in 40.82 crore loan accounts.
- About 68 percent of the accounts under the scheme belong to women entrepreneurs.
- Under the scheme, 51 percent of the accounts belong to SC, ST and OBC entrepreneurs.
Importance of PMMY:
- Formal credit is being made available to informal micro enterprises,
- helping to generate employment opportunities,
- Entrepreneurship is being promoted in SC/ST entrepreneurs by giving them special concessions on interest rates etc.
Concerns related to PMMY:
- There is lack of record on how many employment opportunities have been generated from the loan disbursed,
- There has been an increase in bad loans, especially in the Kishor and Tarun categories, etc.
- Shishu: Loan up to Rs.50,000 (for start-ups and budding entrepreneurs)
- Kishor: Loan from Rs.50, 000 to Rs.5 lakh. (For entrepreneurs already in business)
- Tarun: Loan from Rs.5 lakh to Rs.10 lakh. (For businessmen, the loan is to be used for business expansion)
Source – PIB