Mudra scheme crosses key milestone of 520 mn loans worth ₹33.65 tn

Over 520 million loans worth ₹33.65 trillion have been sanctioned, with ₹32.87 trillion disbursed, under the PM Mudra Yojana as the micro-finance scheme for entrepreneurs completes 10 years, department of financial services secretary M. Nagaraju said.

The scheme has helped spread business growth to small towns and villages, where first-time entrepreneurs are taking charge of their destinies, he said. About 68% of the total loans have been sanctioned to women entrepreneurs, highlighting the scheme's focus on social inclusion and economic empowerment.

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Apart from 68% of the loans being granted to women entrepreneurs, 50% have gone to SC/ST/OBC borrowers, Nagaraju said. The latter category also incluee women.

He added that scheme also has low NPA ratio or non-performing assets of 3.6%. “People are taking loan under the scheme and paying back regularly," the DFS secretary said.

Against an average NPA of 3.6%, the gross NPA in FY25 stood at 2.21%, a tad higher than the previous year's 2.10%.

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The scheme has been adding 500,000 to 600,000 loan accounts every year with sanctions of about ₹5-6 trillion. The same number is also expected in FY26 when loans of upto ₹20 lakh will be provided under the recently launched Tarun-plus programme. Since its launch in October, 2024, 22,557 loan accounts have been opened under Tarun plus with sanctions of ₹3,190 crore.

'Growing entrepreneurial spirit'

The growing entrepreneurial spirit among people can be seen from rising loan value under Mundra scheme which stood at an ever age of ₹40,000 in 2015 and now tiding to an average of ₹1.5 lakh, Nagaraju said.

The Pradhan Mantri Mudra Yojana (PMMY) was launched on 8 April 2015, with the goal of providing collateral-free institutional credit of up to ₹20 lakh through Member Lending Institutions (MLIs).

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This initiative was designed to give micro and small businesses access to institutional financing, which was previously unavailable to them. The loan is available for income-generating activities in manufacturing, trading, services, or allied agricultural sectors, and is available through four loan categories: Shishu (loans up to ₹50,000); Kishor (loans between ₹50,000 and ₹5 lakh); Tarun (loans between ₹5 lakh and ₹10 lakh); Tarun Plus (loans up to ₹20 lakh for entrepreneurs who have successfully repaid previous loans under the 'Tarun' category).

Any individual, who is eligible and has a business plan can avail a loan under the Scheme. Credit Guarantee Fund for Micro Units (CGFMU) operated by National Credit Guarantee Trustee Company (NCGTC) Ltd, a wholly owned company of the government, provides guarantee cover to the MLIs for the loans extended by them under PMMY.

According to “Outcomes of ModiNomics 2014-24”, a report by SKOCH, a think tank, in 2024, at least 51.4 million person-years of employment on average every year have been generated since 2014 with the PMMY adding 25.2 million steady and sustainable jobs on average per year since 2014.

A recent State Bank of India (SBI) report on Mudra highlights how it has transformed entrepreneurship, especially for marginalized groups, women, and micro-businesses.

According to it, growth in Kishor loans ( ₹50,000 - ₹5 lakh), which support growing businesses, has surged from 5.9% in FY16 to 44.4% in FY25, demonstrating a natural progression from micro to small enterprises. The Tarun category ( ₹5 lakh - ₹10 lakh) is also gaining traction, proving that Mudra is not just about starting businesses but helping scale up, the report said.

The SBI report also highlights a significant rise in credit flow to MSMEs, fueled by Mudra’s impact. MSME lending surged to ₹27.25 trillion in FY24 from ₹8.51 trillion in FY14 and is projected to cross ₹30 trillion in FY25.

MSME credit in FY24 made up nearly 20% of total bank credit, up from 15.8% in FY14, showcasing its growing role in India's economy. This credit expansion has allowed businesses in smaller towns and villages to access financial support that was once unavailable, strengthening India’s self-reliant economy and job creation at the grassroots level, the SBI report said.