1: Introduction- Pradhan Mantri Mudra Yojana

- Pradhan Mantri Mudra Yojana (PMMY) is a scheme launched by Indian Government aiming to provide loans to micro and small enterprises.

- The main objective of this scheme is to promote entrepreneurship among the new and existing businesses by offering them financial support.

2: Current Development: PMMY Hits ₹3 Lakh Crore Milestone

- In a significant move for small businesses, the PMMY disbursed loans amounting to ₹3 lakh crore in December 2023, reflecting a 16% year-on-year growth.

- Loan sanctions neared ₹2,99,457 crore a week prior to the end of Q3 in the financial year by December 22, 2023, surpassing previous fiscal year figures.

- Provisional data suggests the noteworthy milestone of ₹3 lakh crore was reached by December 29, 2023.

3: Women Empowerment Through PMMY

- The Mudra Yojana Scheme has emerged as a major platform for empowering women entrepreneurs, with 70% of the sanctioned loans under the scheme granted to women.

- A considerable 25% of these loans aided first-time petty entrepreneurs, shining a light on the scheme's ability to foster entrepreneurship.

- Reports underline positive trends particularly in Tarun and Kishor category loans.

4: Operational Excellence through Portfolio Diversity and Digitalisation

- The Mudra Loan portfolio exhibited an evenly distributed layout across retail, service, and manufacturing sectors.

- The operational process was streamlined with the help of digitalization before and after loan disbursements, showcasing the scheme's efficiency.

5: Safety Of Bank’s Exposure to PMMY Loans

- Economist B Yerram Raju stated that protection mechanisms against negative implications linked with PMMY loans are ensured through strict procedure implementation and entrepreneur-led initiatives.

- The loans dispensed under PMMY were fully insured, limiting the risk for banks.

- He also highlighted minimal engagement with entrepreneurs both before and after Mudra loan disbursement as a potential area for enhancing risk management and support mechanisms.

General Knowledge:

- PMMY, introduced in 2015 by the NDA government, develops the small/micro non-corporate sector by extending institutional finance.

- Its goal aligns with the vision of ‘Funding the Unfunded’ and providing loans up to 10 lakh to the non-corporate, non-farm small/micro enterprises.

- Three categories of loans under PMMY- categorised as Shishu, Kishore and Tarun signify the stage of growth and funding needs of the beneficiary.

- Spotting its success, similar models are being studied for emulation in countries like Nepal and Ethiopia.