Why in news?
On 8 April 2026 the Government of India marked 11 years of the Pradhan Mantri Mudra Yojana, a flagship scheme that provides collateral‑free loans to micro and small enterprises. Official figures show that over 57 crore loans amounting to ₹40.07 lakh crore have been disbursed since the scheme’s launch, prompting praise from the Union Finance Minister for its role in democratising entrepreneurship.
Background
The Pradhan Mantri Mudra Yojana was launched on 8 April 2015 by Prime Minister Narendra Modi to “fund the unfunded” by extending institutional credit to non‑corporate, non‑farm small enterprises. Operated through Micro Units Development and Refinance Agency (MUDRA) Ltd, the scheme enables banks, Non‑Banking Financial Companies (NBFCs) and micro‑finance institutions to provide collateral‑free loans up to ₹20 lakh. It aims to bridge the gap for entrepreneurs who lack access to formal banking.
Key features
- Loan categories: PMMY offers four loan categories based on the growth stage of the business: Shishu (up to ₹50,000), Kishor (₹50,000 to ₹5 lakh), Tarun (₹5 lakh to ₹10 lakh) and TarunPlus (₹10 lakh to ₹20 lakh). These cover term finance and working capital needs in manufacturing, services, trading and activities allied to agriculture.
- Wide reach: Loans are delivered through a network of commercial banks, regional rural banks, small finance banks, micro‑finance institutions and NBFCs. Interest rates are regulated by Reserve Bank of India guidelines.
- Focus on inclusion: The scheme emphasises support for women, Scheduled Castes, Scheduled Tribes and Other Backward Classes. Two‑thirds of all loans have been sanctioned to women entrepreneurs, and around half to SC/ST/OBC borrowers.
Achievements over 11 years
- Extensive outreach: By March 2026 more than 57.79 crore loans worth over ₹40 lakh crore had been sanctioned. Nearly one‑fifth of these loans went to first‑time entrepreneurs.
- Empowering women: About 67 percent of the loans have been issued to women, helping them start and expand businesses across diverse sectors.
- Financial inclusion: The scheme has reduced dependence on informal moneylenders and extended the formal banking network to previously unserved or underserved segments.
Significance
- Democratising entrepreneurship: By removing collateral requirements, PMMY lowers barriers for ordinary citizens to start businesses, fostering self‑employment and job creation.
- Strengthening the credit ecosystem: The programme expands the reach of banks and financial institutions, encouraging them to develop innovative credit products and use digital platforms.
- Inclusive growth: Targeted lending to women and marginalized communities supports social equity and contributes to the government’s vision of Viksit Bharat (Developed India) by 2047.
Conclusion
As the Pradhan Mantri Mudra Yojana completes its eleventh year, it stands as a major pillar of India’s financial inclusion strategy. Continued vigilance in monitoring loan quality and strengthening support services such as entrepreneurship training will ensure that the scheme remains effective in empowering micro and small enterprises.
Source: Press Information Bureau
