As India celebrates a decade of the Pradhan Mantri Mudra Yojana (PMMY), the flagship financial inclusion scheme stands as a testament to the country’s efforts to “fund the unfunded” — providing credit to micro-entrepreneurs and small businesses long excluded from the formal banking system.
Impressive Numbers, Remarkable Reach
Since its launch in 2015, over 52 crore loans worth ₹32.6 lakh crore have been sanctioned under Mudra. Annual disbursals surged from ₹1.3 lakh crore in FY16 to over ₹5.3 lakh crore in FY24, showing resilience even during the COVID-19 pandemic. Tamil Nadu emerged as the top beneficiary state, followed by Uttar Pradesh, Karnataka, Bihar, West Bengal, and Maharashtra.
Empowering Women and Marginalised Groups
Mudra’s biggest success lies in women empowerment—68% of Mudra accounts belong to women, making it a vital tool for female entrepreneurship in India. Moreover, 50% of beneficiaries are from SC, ST, and OBC communities, while minorities account for 11%, showcasing the scheme’s inclusive intent.
Maturing Businesses, Growing Loan Sizes
Initially dominated by ‘Shishu’ loans (below ₹50,000), Mudra’s portfolio is maturing. Today, nearly 45% of loans are ‘Kishor’ (₹50,000 – ₹5 lakh), with the average loan size increasing from ₹38,000 in 2016 to ₹1.02 lakh by FY25—signalling rising ambitions of micro-entrepreneurs.
But All Is Not Smooth Sailing
Despite the achievements, challenges persist. By 2019, ₹17,000 crore worth of Mudra loans had turned non-performing (NPAs). While the overall NPA ratio of 2.2% is low compared to public sector banks’ 8%, experts warn that many borrowers may be recycling credit instead of expanding businesses.
Moreover, the lack of post-credit support—like business training, marketing assistance, and technology upgrades—remains a bottleneck to sustainable growth.
The Road Ahead: Beyond Credit
As Mudra steps into its next decade, experts urge a shift from mere loan disbursement to entrepreneurial ecosystem development—blending credit with skill-building, mentorship, and market access.
If addressed, Mudra could transform millions of small businesses into engines of sustainable growth, boosting jobs and incomes across rural and semi-urban India.
