Report has analyzed performance and contribution of the PM Mudra Yojana under the Ministry of Finance towards Micro, small, medium enterprises (MSMEs).

Key Findings of Study

• Overall Performance: Since its launch in 2015, scheme has provided credit support to 35 crore Micro and Small entrepreneur Accounts. 
• Financial Inclusion: Women held around 71% of the total number of accounts (FY 2022). Sanctioned amount for new entrepreneurs has also increased.
• Encourages small businesses: Majority loan accounts (80%) are in the Shishu category (FY 2021).
• Regional variation: Number of accounts & amount sanctioned for the Northeast region is not only the lowest but is also decreasing.

Challenges associated with Scheme:

• Scheme Design
  • Lack of collateral increases fear of NPA among banks.
  • High refinancing rates
  • Ceiling of 15% on pay out under Credit Guarantee Fund for Micro Units (CGFMU) is not feasible and restricts benefits of banks.
• Institutional Mechanism
  • Poor credit penetration to weaker sections & remote areas
  • Lack of centralized database for collecting information about customers

Key recommendations for scheme 

• A Portal enabling real-time upload of beneficiary data.
• Increasing digitization e.g. Use of Chatbots for query redressal.
• A recognition mechanism is needed for different Micro Lending Institutions (MLIs) based on their scale of operation and performance.