MUDRA 2.0 Loans Should Target Greater Equity, Deepen Financial Literacy

Pradhan Mantri Mudra Yojana (PMMY) - Key Points

Overview:

Launch: 2015 by the Government of India.
Aim: Provide affordable credit to micro and small enterprises.
Objective: "Fund the unfunded" by offering easy credit access to small borrowers.

Loan Details:

• Amount: Up to ₹10 lakh for non-farm income-generating activities (manufacturing, processing, trading, services).
• Eligibility: Indian citizens with a viable business plan in the non-farm sector requiring credit below ₹10 lakh.

Categories of Loans:

• Shishu: Loans up to ₹50,000 for new and micro enterprises.
• Kishore: Loans between ₹50,000 to ₹5 lakh for businesses in the growth phase.
• Tarun: Loans from ₹5 lakh to ₹10 lakh for businesses looking to expand.

Subsidy:

No direct subsidy under PMMY, but loans can be linked with government schemes that provide capital subsidies.

Impact of MUDRA 1.0:

• Loan Disbursement: Over ₹27.75 lakh crore disbursed to 47 crore entrepreneurs.
• Inclusivity: 69% of loan accounts held by women; 51% by SC/ST and OBC entrepreneurs.
• Job Creation: Promoted employment and small business growth, especially in rural and semi-urban areas.

Vision for MUDRA 2.0:

• Expanded Scope: Increase outreach, especially in rural and semi-urban areas. Provide financial literacy, mentorship, and business support.
• Financial Literacy Programmes: Nationwide initiatives for budgeting, savings, credit management, investment, and digital literacy.
• Enhanced Credit Guarantee Scheme (ECGS): Reduce risk for lenders, encourage more loans to small and microenterprises.
• Robust Monitoring and Evaluation Framework (RMEF): Real-time tracking of loans to ensure transparency and reduce misuse. Include impact assessments for policy improvement.