For ten years, PMMY Empowering Small and Microbusiness Owners

On April 8, the Pradhan Mantri Mudra Yojana (PMMY) celebrated its tenth anniversary. Since its inception on April 8, 2015, it has provided more than 52 crore beneficiaries throughout India with over INR 33 lakh crore in collateral-free loans. 68% of Mudra loan accounts are held by female entrepreneurs. On July 23, 2024, the Finance Minister announced an increase in the loan ceiling to INR 20 lakh as part of the Union Budget 2024-25. This move is aligned to further strengthen and support business owners. The new cap became operative on October 24, 2024. Banks, NBFCs, MFIs, and other financial organisations are offering these loans. Those who have previously taken out and successfully repaid loans under the Tarun category are the target audience for the recently announced Tarun Plus loan category. As a result, business owners would be able to obtain capital ranging from INR 10 lakh to INR 20 lakh. Furthermore, these improved loans will now be covered by guarantee coverage from the Credit Guarantee Fund for Micro Units (CGFMU). Thus, the government's dedication to fostering a strong entrepreneurial ecosystem in India is further reinforced.

Powerful Monetary and Social Effect

The SBI research states that OBC, Scheduled Tribe, and Scheduled Caste (SC) entrepreneurs own 50% of Mudra accounts. Additionally, minority communities account for 11% of Mudra loan holders. Three credit categories are offered by the scheme: Shishu loans up to INR 50,000, Kishor loans between INR 50,000 and INR 5 lakh, and Tarun loans between INR 5 lakh and INR 10 lakh. There has been an apparent shift in recent years from lesser Shishu loans to more valuable Kishor and Tarun loans. Kishor loans accounted for only 5.9% of all disbursements in FY16, according to figures referenced in the press release. In FY25, this increased to 44.7%. During this time, the average loan amount also tripled, rising from INR 38,000 in FY16 to more than INR 1.02 lakh in FY25.

Empowering Women Entrepreneurs

At a compound annual growth rate (CAGR) of 13%, the average loan amount per female borrower increased to INR 62,679 between FY16 and FY25. According to the PIB announcement, women's average deposit balances increased by 14% yearly to INR 95,269 as well. Employment in women-led MSMEs increased in states that gave out a larger percentage of Mudra loans to women. The programme has been crucial in increasing total MSME credit. Credit to the MSME sector increased from INR 8.51 lakh crore in FY14 to INR 27.25 lakh crore in FY24, and it is expected to surpass INR 30 lakh crore in FY25, according to the SBI study. Over the same time period, MSME lending's percentage of overall bank credit increased from 15.8% to about 20%.