MUDRA yojana

MUDRA yojana

Subject: Economy

Context :Non-performing assets of banks for Mudra loans  are lower than the average NPAs of the sector as a whole–data obtained under the Right to Information Act reveals.

Details:

• Bad loans under the Pradhan Mantri MUDRA Yojana for all banks (public, private, foreign, state cooperative, regional rural and small finance) is just 3.38 per cent of the total disbursements of Rs 13.64 lakh crore under the scheme.
• The gross NPAs of the banking sector in the previous six years was much higher than in 2021-22
  • 7.3 per cent in 2020-21
  • 8.2 per cent in 2019-20
  • 9.1 per cent in 2018-19
  • 11.2 per cent in 2017-18
  • 9.3 per cent in 2016-17
  • 7.5 per cent in 2015-16
• Within the three categories, the NPAs for Shishu loans (up to Rs 50,000) were the lowest at 2.25 percent of disbursements: 
  • Highest was for Kishore loans (Rs 50,001 to Rs 5 lakh) at 4.49 per cent
  • Under Tarun loans (over Rs 5 lakh up to Rs 10 lakh)  bad loans were 2.29 per cent of disbursements.

MUDRA yojana

• The Micro Units Development & Refinance Agency (MUDRA) was launched on April 8, 2015, by Prime Minister Narendra Modi.
  • MUDRA, which stands for Micro Units Development & Refinance Agency Ltd., is a financial institution set up by the Government.
  • It provides funding to the non-corporate small business sector through various last-mile financial institutions like Banks, Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs).
  • MUDRA does not lend directly to micro-entrepreneurs/individuals.
• It aims to provide loans up to Rs 10 lakh to non-corporate, non-farm, small and micro enterprises.
• It is known as the Pradhan Mantri Mudra Yojana-loans are given under three categories:
  • Shishu up to Rs 50,000,
  • Kishore Rs 50,001 to Rs 5 lakh, and
  • Tarun from Rs 5 lakh to Rs 10 lakh.
• At least 60% of the credit would go to Shishu Category Units, with the remaining 40% going to Kishor and Tarun Categories.
• The loan provided under the PMMY is not subsidised.  However, if the loan proposal is linked to some Government scheme, wherein the Government is providing capital subsidy, it will be eligible under PMMY also.
• Mudra loans do not require any collateral/ security, and hence were perceived to be very risky.
• Public Sector Banks such as PSU Banks, Regional Rural Banks and Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions (MFI) and Non Banking Finance Companies (NBFC) offer these loans.
• Eligibility:
  • Any Indian Citizen who has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading or service sector and whose credit need is less than Rs 10 lakh can approach either a Bank, MFI, or NBFC for availing of Micro Units Development & Refinance Agency Ltd. (MUDRA) loans under Pradhan Mantri Mudra Yojana (PMMY).
• Sectors covered:
  • Land Transport Sector / Activity – Which will inter alia support units for purchase of transport vehicles for goods and personal transport such as auto rickshaw, small goods transport vehicle, 3 wheelers, e-rickshaw, passenger cars, taxis, etc.
  • Community, Social & Personal Service Activities – Such as saloons, beauty parlours, gymnasium, boutiques, tailoring shops, dry cleaning, cycle and motorcycle repair shop, DTP and Photocopying Facilities, Medicine Shops, Courier Agents, etc.
  • Food Products Sector – Support would be available for undertaking activities such as papad making, achaar making, jam / jelly making, agricultural produce preservation at rural level, sweet shops, small service food stalls and day to day catering / canteen services, cold chain vehicles, cold storages, ice making units, ice cream making units, biscuit, bread and bun making, etc.
  • Textile Products Sector / Activity – To provide support for undertaking activities such as handloom, powerloom, chikan work, zari and zardozi work, traditional embroidery and hand work, traditional dyeing and printing, apparel design, knitting, cotton ginning, computerized embroidery, stitching and other textile non garment products such as bags, vehicle accessories, furnishing accessories, etc.