Pradhan Mantri Mudra Yojana is boosting the rural economy and enabling crores of micro-entrepreneurs their dreams

According to the recent Franklin Templeton report, India is emerging as the fastest-growing economy. Therefore, the role of micro, small, and medium enterprises (MSMEs) is essential in the journey toward a Developed India in 2047. About 12 crore jobs are in MSMEs, which contribute significantly to the employment market and promote the country's entrepreneurship culture.

Although the backbone of the manufacturing industry is the MSMEs, a major hindrance has been the lack of access to credit, in particular, from formal sources. Institutional funding, through this, can bring these unorganized enterprises to the mainstream and enhance income generation and employment generation in the economy. The introduction of Pradhan Mantri Mudra Yojana and Micro Units Development and Refinance Agency Ltd. (MUDRA Ltd.) by Prime Minister Narendra Modi on 8th April 2015, was a path-breaking initiative for this purpose. MUDRA Yojana has enabled crores of micro-entrepreneurs to access credits from the financial system in the period of a single decade. MUDRA Yojana has successfully disbursed funds to erstwhile deprived non-agricultural, non-corporate small enterprises through a variety of lending intermediaries such as Public Sector Banks, Private Sector Banks, Regional Rural Banks, Small Finance Banks, Non-Banking Finance Companies, Micro Finance Institutions. The collective amount sanctioned and disbursed under it stands at Rs. 33.54 lakh crore, Rs. 32.76 lakh crore, covering around 53 crore loan accounts. MUDRA Yojana promotes entrepreneurship and self-employment by granting loans unguaranteed. It has enabled the emergence of new jobs, as well as curbing unemployment, in large numbers, mainly in rural, semi-urban villages.

Over the past decade, MUDRA has fulfilled its objective of promoting the growth of small businesses by refinancing the borrowers. As a wholly-owned subsidiary of SIDBI, MUDRA Ltd. has consistently worked towards making financial services more accessible and inclusive, especially for micro-enterprises operating at the grassroots level. It has helped these small businesses break free from the clutches of intermediaries and provided them with the financial resources necessary to unleash their growth potential.

With loans disbursed across all districts of the country, MUDRA loans have played a vital role in ensuring regional and balanced growth. Recognizing the growing needs of small businesses, the government recently introduced a new loan category Tarun Plus, which increases the loan amount to Rs 20 lakh. This reform recognizes the efforts of entrepreneurs who have demonstrated exceptional creditworthiness and repayment capacity. Prior to Tarun Plus, MUDRA loans were offered through three loan categories: Shishu: Rs 50,000. Kishor: Loans above 50,000 and up to 5 lakhs and Tarun: Loans above 5 lakhs and up to 10 lakhs. Term loans are also provided under this scheme as a working capital facility. Mudra Debit Card is issued to the borrowers on the RuPay platform by various lending institutions.

Approvals and disbursements to Member Lending Institutions (MLIs), which were Rs 3,533 crore and Rs 3,526 crore respectively in the first year of its operations, have cumulatively increased to Rs 1.03 lakh crore and Rs 1 lakh crore respectively by March 31, 2025. To achieve this level, Mudra Ltd. has partnered with more than 120 Member Lending Institutions over the years and provided refinance support to them.

68 percent of the significant Mudra loans under the Mudra scheme have been given to women entrepreneurs, empowering them to achieve financial independence and make meaningful contributions to their families and communities. Additionally, weaker sections of the society such as SC, ST, and OBC have been the major beneficiaries, receiving 50 percent of Mudra loans. Mudra is also promoting a culture of entrepreneurship with new entrepreneurs/loans. Mudra is also promoting a culture of entrepreneurship with 21 percent of Mudra loans given to accounts.