(GIST OF YOJANA) PM Mudra Yojana : A Decade of Hope, Opportunity and inclusivity

GIST OF YOJANA : PM Mudra Yojana : A Decade of Hope, Opportunity and inclusivity

JULY-2025

PM Mudra Yojana : A Decade of Hope, Opportunity and inclusivity

Context:

The Pradhan Mantri Mudra Yojana (PMMY) was launched in April 2015 with the objective of providing financial support to micro and small enterprises, PMMY has completed a decade of its existence. It has fostered incorporation and growth of small businesses by providing them access to formal credit and thereby creating more opportunities for employment and economic growth. The resounding success of PMMY can be gauged from the rapidly increasing scale of sanctions and disbursements under the programme; as of 31 March 2025, the cumulative amount disbursed under PMMY reached a figure of Rs 33.32 lakh crore over 52.73 crore loan accounts. Importantly, it has seeded a culture of micro-entrepreneurship across the length and breadth of the country.

Significance:

The entrepreneurial spirit embodied by Micro, Small and Medium Enterprises (MSMEs) is crucial for economic growth and development in India. MSMEs in India are not only contributing significantly to production, employment and exports but are also pivotal in promoting inclusive growth. The heterogeneous nature of MSMEs in India, marked by the presence of a wide range of enterprises from small artisans to sophisticated technology-based startups, contributes to the uniqueness of the sector. To promote financial inclusion in India, the Government of India’s (Gol)’s policy framework is focused on three pillars:

banking the unbanked,
securing the unsecured and
funding the unfunded. PMMY was a step specifically towards addressing the third pillar and serving the microcredit market in a much more comprehensive manner.

PMMY loans ranging from Rs 50,000 to Rs 10 lakh (Shishu, Kishore and Tarun) were launched at a time when a nuanced approach was required to fill the lacunas in thespace of MSME finance and promote inclusive development. Subsequently, the loan limit was enhanced to Rs 20 lakh with the launch of the Tarun Plus category.

Factors Behind the Popularity of PMMY

PMMY was launched during a time when the MSME sector, and especially the micro-segment was severely credit-starved. Today, the PMMY scheme is considered to be one of the most inclusive government programmes and is open to all types of businesses, including individuals, sole proprietors, small businesses, traders, service providers and startups, including existing MSMEs. Certain features of the scheme have made it highly popular across the country.

Zero collateral: This makes the scheme especially beneficial for micro-enterprises and small entrepreneurs who do not have significant assets to pledge. Moreover, PMMY loans are eligible to avail of the credit guarantee facility from either Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) or under the Credit Guarantee Fund for Micro Units (CGFMU), managed by NCGTC.

Competitive rates: While the interest rates under the PMMY scheme vary and are determined by the lending institutions, they are designed to be affordable for small businesses.

Flexible repayment: The loans under PMMY also come with flexible repayment options, allowing businesses to repay in instalments that match their cash flow and earnings.

Digital accessibility: Applications for PMMY loans can be made through various banks and financial institutions or through the online national portal JanSamarth, making the process more convenient and accessible.

Extensive lender participation: The scheme has been successfully implemented by a wide network of public sector banks, private sector banks, regional rural banks (RRBs), small finance banks (SFBs), micro¬ finance institutions (MFIs), and non-banking financial companies (NBFCs).

Transformative Impact of PMMY: Inclusivity and Empowerment

Since its launch, PMMY has significantly contributed to the economic empowerment of small businesses in India. Some of the key impacts include:

Financial Inclusion: The scheme has helped millions of micro-entrepreneurs gain access to formal credit for the first time, promoting financial inclusion across the country. As of 31 March 2025, PMMY loan sanctions of Rs 10.56 lakh crore have been provided to 10.97 Cr new accounts, with almost one third (approx 31%) share in cumulative sanctions. Further, the total sanctions to the SC/ST/OBC categories amount to Rs 11.72 lakh crore, which is about 34.5% of the cumulative total sanctions, highlighting the inclusive character of the program.

Empowerment of Small Entrepreneurs: By offering affordable loans, PMMY encourages self- employment and entrepreneurship, particularly in rural areas.

Promotion of Informal Micro-Enterprises: It aims to boost the growth of non-corporate small businesses and informal micro-enterprises across the country. Thousands ofsmall businesses have benefitted from PMMY, enabling them to scale up operations and contribute to the growth of the Indian economy.

Job Creation: By supporting small and micro enterprises, PMMY facilitates the creation of jobs and helps reduce unemployment, especially in rural and semi-urban areas. PMMY has played a role in the creation of millions of jobs, as small enterprises typically employ a large number of people per unit of turnover, especially in rural areas.

Easier Access to Credit: The initiative has made it easier for small businesses to access credit without the need for traditional banking infrastructure or collateral.

Challenges for PMMY

PMMY is one of the impactful schemes of the government. Given the per capita availment analysis, there is a large scope for greater penetration of the scheme in high-population states like UP, Bihar, etc., and also in North-Eastern states.
While with the rise in industrialisation and entrepreneurship in regions, the availment is likely to improve, there is also a case for popularisation of the scheme in such states.
Continuous awareness campaigns and financial literacy programs for availing the benefits and effectively managing loans can help in addressing the issue.

Conclusion:

PMMY, with a decade of innovation in financial inclusion, will continue to address the huge, unserved and underserved credit market, thereby ensuring a progressive and sustainable growth of the Indian economy. In this decadal journey, significant progress has already been made towards the objectives of inclusion, formalisation and development. Going forward, the PMMY will undoubtedly continue to play a key role in realising the vision of’Viksit Bharat1. Beyond the numbers, PMMY is a story of hope, opportunity and inclusivity.