Recommendations for Pradhan Mantri Mudra Yojana
The Union Ministry of Micro, Small and Medium Enterprises (MSME) has proposed increasing loan limits for the Shishu and Kishore categories under the Pradhan Mantri Mudra Yojana in the FY26 Budget.
Proposed Changes
- The Shishu category limit is suggested to be raised to Rs 5 lakh.
- The Kishore category limit is proposed to be increased to Rs 10 lakh.
An official confirmed that multiple recommendations have been submitted by the MSME ministry, with the final decision to be made in the Union Budget.
Current Loan Structure
- Shishu: Loans up to Rs 50,000.
- Kishore: Loans between Rs 50,001 and Rs 5 lakh.
- Tarun: Loans from Rs 5,00,001 to Rs 10 lakh.
- A Tarun Plus segment in FY25 raised limits to Rs 20 lakh for successfully repaid borrowers.
Mudra Loan Performance
- Total sanctioned Mudra loans till January 17: 37 million.
- Amount sanctioned: Rs 3.66 trillion.
Public-Sector Banks' Performance
- Public-sector banks, including regional rural banks, achieved only 42% of their disbursement target by October FY25.
- Disbursed Rs 97,094 crore against a target of Rs 2.3 trillion by October 25, 2024.
- Bank of Baroda's performance: 16% of its annual target of Rs 22,000 crore by October 25.
- State Bank of India disbursed 44% of its target; Canara Bank met 52%; Union Bank of India achieved 57%.
Challenges in Microfinance Sector
The microfinance sector faces challenges, with higher non-performing assets (NPAs) and declining profits. Some institutions are restricted by RBI from new loans.
NPA Trends
- Mudra loan NPAs for PSBs decreased to 3.4% in 2023-24 from 4.77% in 2020-21.
- Private commercial banks saw NPAs fall to 0.95% in 2023-24 from 1.77% in 2020-21.
