Launch and Purpose
- Launched on April 8, 2015, by the Prime Minister, PMMY aimed to provide collateral-free microcredit up to ₹10 lakh to non-corporate, non-farm small and micro entrepreneurs.
- It was a direct response to the 2013 NSSO survey, which identified 5.77 crore small business units facing severe credit access barriers.
Challenges Addressed by PMMY
- Lack of collateral among small entrepreneurs
- Complex bank procedures and poor credit histories
- High transaction costs and limited financial literacy
Loan Categories Under PMMY
- Shishu (Loans up to ₹50,000)
- Kishore (Loans between ₹50,001 and ₹5 lakh)
- Tarun (Loans between ₹5 lakh and ₹10 lakh)
- Tarun Plus (Loans up to ₹20 lakh, for successful Tarun category borrowers)
Implementation and Support Mechanisms
- Loans offered through Member Lending Institutions (MLIs) such as banks, NBFCs, and MFIs.
- A Credit Guarantee Fund managed by National Credit Guarantee Trustee Company Ltd (NCGTC) helps reduce risk for lenders and encourage lending to asset-less and first-time borrowers.
- Simplified loan application processes, especially for Shishu borrowers, using digital platforms such as:
- Jan Samarth Portal
- PSB Loans in 59 Minutes
- Many financial institutions have also developed mobile apps and online platforms to reduce paperwork and enhance convenience.
Impact Over a Decade (2015–2025)
- Over 52 crore loans sanctioned
- ₹33.5 lakh crore in total loan disbursal
- 20% of beneficiaries are first-time entrepreneurs
- Average loan size has nearly doubled
- 65% of total disbursed amount under Kishore and Tarun categories
Inclusivity and Empowerment
- 68% of beneficiaries are women entrepreneurs
- Nearly 50% of loans have gone to SC/ST/OBC communities
- The scheme has been pivotal in promoting:
- Financial inclusion
- Women’s economic empowerment
- Microenterprise development
Contribution to National Goals
- PMMY aligns with the vision of Atmanirbhar Bharat and Viksit Bharat 2047, fostering self-reliance and inclusive economic growth.
UPSC Mains PYQ
1. Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard. (UPSC-2023)
