The disbursal of small business loans under Pradhan Mantri Mudra Yojana (PMMY) registered a record 38 per cent growth in the first half of the current financial year ended September 2023, compared to the same period last year. As on September 2023, the total disbural of PMMY loans stood at ₹1,91,863 crore, against ₹1,37,785 crore in the corresponding quarter of the previous year, according to government data.  

“The disbursement in the first half of the current fiscal year is a record because the 38 percent growth was much higher than the 30 per cent growth registered in the first half of FY23,’‘ a senior Mudra official told businessline on Tuesday.

The drivers for growth are increasing demand for the second category of Kishore loans (₹50,000 to ₹5 lakh), which indicates higher economic optimism and activity, among others, he added. According to BIbekananda Panda, Senior Economist, State Bank of India, robust economic activity and positive business sentiment are fuelling the expansion of Mudra loans. 

“Additionally, the borrower-friendly atmosphere and the ready availability of funds without collateral are contributing to a surge in demand for small-value credit,’‘ he said. 

While these collateral-free loans of up to ₹10 lakh, provided by banks, non-banking financial companies (NBFCs), microfinance institutions (MFIs), and other financial intermediaries under the Mudra scheme are backed by the Credit Guarantee Fund for Micro Units (CGFMU), lenders, particularly public sector banks, are adhering to underwriting standards to ensure that the borrowed funds are used for their intended purposes, added Panda. 

three categories

Mudra loans are extended in three categories — Shishu (up to ₹50,000), Kishor (above ₹50,000 and up to ₹5 lakh) and Tarun (above ₹5 lakh and up to ₹10 lakh). 

In the financial year ended March 2023, over ₹4.50-lakh crore PMMY loans were disbursed, against ₹3.31-lakh crore in FY22.