The Centre may set a target between Rs 5-6 lakh crore in 2025-26 for loans under the Pradhan Mantri Mudra Yojana (PMMY) compared with Rs 5 lakh crore in 2024-25.
The PMMY was launched on April 8, 2015, by Prime Minister Narendra Modi to provide collateral-free institutional credit of up to Rs 20 lakh through Member Lending Institutions.
Since the inception of the scheme, over 52.37 crore loans amounting to Rs 33.65 lakh crore have been sanctioned, with approximately 20% of the loans to new entrepreneurs or accounts, financial services secretary M Nagaraju said. The total disbursements are around Rs 33 lakh crore.
The non-performing assets (NPAs) under the PMMY have continued to improve in FY25, with gross bad loans declining to 2.21% compared with 2.1% in the year ago period, Nagaraju said.
However, PSU banks reported a higher average NPA of 3.6%, he said, adding that was due to better recovery rate in the private sector compared to the public sector lender.
Overall, lenders have added about 25,000 beneficiaries under the Tarun Plus category of PM Mudra Yojana (PMMY) in a 4-month short period of FY25, where borrowers were given enhanced loans up to Rs 20 lakh.
The scheme was announced by Finance Minister Nirmala Sitharaman in the July Budget for FY25.
As per the Budget 2024-25 announcement, the loan limit was doubled to Rs 20 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.
As many as 24,557 new borrowers took loans under the Tarun Plus category amounting to Rs 3,790 crore in a short period of four months during FY25, Nagaraju said.
Notably, he said, 68% of the loans have been granted to women entrepreneurs and 50% have gone to SC/ST/OBC borrowers.
The average loan size of the loans has gone up from Rs 40,000 to Rs 1.05 lakh, he said, adding that this is the biggest programme in the world with loans of this size.
The PMMY focuses on the financial needs of all stakeholders, ranging from budding entrepreneurs to hardworking farmers, through various initiatives of the scheme. Under the PMMY, collateral-free loans of up to Rs 10 lakh are extended by member lending institutions (MLIs), viz scheduled commercial banks, regional rural banks (RRBs), small finance banks (SFBs), non-banking financial companies (NBFCs) and microfinance institutions (MFIs).
The loans are given for income-generating activities in the manufacturing, trading and services sectors and activities allied to agriculture.
The scheme was launched to encourage small businesses, and banks were asked to provide collateral-free loans up to Rs 20 lakh under three categories — Shishu (up to Rs 50,000), Kishore (between Rs 50,000 and Rs 5 lakh) and Tarun (Rs 20 lakh).