Pradhan Mantri Mudra Yojana (PMMY) is the Government of India’s scheme, launched on 8 April 2015, under which banks, NBFCs and microfinance institutions give collateral-free loans of up to Rs 20 lakh to non-farm micro and small enterprises; in ten years it has sanctioned more than 52 crore loans worth over Rs 33 lakh crore.
Ten-Year Performance
- Rs 31.85 lakh crore disbursed out of Rs 32.61 lakh crore sanctioned from April 2015 to February 2025, a sign of strong credit demand from micro businesses.
- About 52 crore loan accounts since inception; Bihar (about 5.8 crore), Tamil Nadu (5.7 crore), Uttar Pradesh and West Bengal (about 5 crore each) and Karnataka (4.9 crore) lead in numbers.
- Top states by amount: Tamil Nadu (Rs 3.21 lakh crore), Uttar Pradesh (Rs 3.07 lakh crore), Karnataka (Rs 2.98 lakh crore), West Bengal (Rs 2.78 lakh crore), Bihar (Rs 2.77 lakh crore) and Maharashtra (Rs 2.69 lakh crore).
- Q3 FY25 saw a record quarterly disbursement of Rs 3.39 lakh crore, after a rare dip in the first half of FY25 (Rs 1.86 lakh crore against Rs 1.92 lakh crore a year earlier).
- About 68% of borrowers are women and roughly half belong to SC, ST and OBC communities; the average loan size has risen as Kishore and Tarun loans grow faster than Shishu.
Loan Categories
- Shishu: up to Rs 50,000.
- Kishore: above Rs 50,000 and up to Rs 5 lakh.
- Tarun: above Rs 5 lakh and up to Rs 10 lakh.
- Tarun Plus: above Rs 10 lakh and up to Rs 20 lakh, introduced from October 2024 as announced in the Union Budget 2024-25, for borrowers who have repaid an earlier Tarun loan.
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How the Scheme Works
- Eligibility: any individual or enterprise with a viable plan in manufacturing, trading, services or allied agricultural activities (poultry, dairy, bee-keeping and similar) that is not a corporate; loans are for income generation, not consumption.
- Lenders: scheduled commercial banks, regional rural banks, small finance banks, NBFCs and MFIs; there is no collateral and no processing fee for Shishu loans.
- MUDRA Ltd (Micro Units Development and Refinance Agency), a subsidiary of SIDBI, refinances lenders and sets guidelines; it does not lend directly.
- Loans are guaranteed by the Credit Guarantee Fund for Micro Units (CGFMU) managed by NCGTC.
- Loans can be taken through the Mudra card (a RuPay debit card on the working-capital limit), the Udyamimitra and JanSamarth portals, or directly at branches.
Why It Matters
- PMMY is the main channel of formal credit to the informal micro sector – street vendors, artisans, shopkeepers, transport operators and women-run enterprises – and a key financial-inclusion metric alongside PMJDY.
- Critics point to small average loan sizes and rising stress in Shishu loans; the government points to job creation and the shift from moneylenders to banks.
Important Facts for Examsmost asked
- PMMY launched 8 April 2015; MUDRA Ltd is a SIDBI subsidiary; guarantee through CGFMU (NCGTC).
- Categories: Shishu (up to Rs 50,000), Kishore (Rs 50,000-5 lakh), Tarun (Rs 5-10 lakh), Tarun Plus (Rs 10-20 lakh, from October 2024).
- Ten years: over 52 crore loans and over Rs 33 lakh crore sanctioned; about 68% women borrowers.
- Non-farm income-generating micro enterprises; no collateral.
- Record quarterly disbursement: Rs 3.39 lakh crore in Q3 FY25.
FAQs
Is Mudra a bank?
No. MUDRA is a refinancing and development agency under SIDBI; the loans are given by banks, NBFCs and MFIs.
Can a farmer take a Mudra loan?
Only for allied, non-crop activities such as dairy, poultry or fisheries; crop loans come under the Kisan Credit Card, not PMMY.
Why is PMMY asked in RBI Grade B and NABARD exams?
It is central to MSME finance and financial inclusion; the loan slabs, the Tarun Plus change, the launch date and the ten-year numbers are frequently tested.
