Pradhan Mantri Mudra Yojana (PMMY)

March 31, 2018



The biggest bottleneck to the growth of entrepreneurship in the Non–Corporate Small Business Sector (NCSB) is lack of financial support to this sector. More than 90% of this sector does not have access to formal sources of finance. GoI is setting up MUDRA Bank through a statutory enactment for catering to the needs of the NCSB segment or the informal sector for bringing them in the mainstream. Pending enactment of an act for MUDRA Bank, a Non Banking Finance Company as MUDRA Ltd has been set up as a subsidiary of SIDBI.



Features of the Scheme:

  1. Under the aegis of Pradhan Mantri Mudra Yojana (PMMY), MUDRA has created products / schemes. The interventions have been named 'Shishu', 'Kishor' and 'Tarun' to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth to look forward to :

    • Shishu : covering loans upto 50,000/-

    • Kishor : covering loans above 50,000/- and upto 5 lakh

    • Tarun : covering loans above 5 lakh and upto 10 lakh

The loans will be provided based on a priority matrix according to which Shishu is the highest priority followed by Kishor and then Tarun. 

 Funding Support from Mudra: Four Types

  1. Micro Credit Scheme (MCS) for loans upto 1 lakh finance through MFIs.

  2. Refinance Scheme for Commercial Banks / Regional Rural Banks (RRBs) / Scheduled Co-operative Banks

  3. Women Enterprise programme

  4. Securitisation of loan portfolio.

Monitoring Agency of PMMY:

  1. At state level - State Level Bankers Committee(SLBC) Forum

  2. At Central level - MUDRA/Department of Financial Services, Government of India.

 Credit Plus Approach of MUDRA:

Besides the credit constraints, the NCSBs face many non-credit challenges, like,

  1. Skill Development Gaps

  2. Knowledge Gaps

  3. Information AsymmetryFinancial / Business Literacy

  4. Lack of growth orientation

To address these constraints, MUDRA will adopt a credit- plus approach and offer Developmental and Support services to the target audience. It will act as a market maker and build –up an ecosystem with capacities to deliver value in an efficient and sustainable manner

Benefits of MUDRA Scheme:

  1. Income generation

  2. Employment creation

  3. Empowerment of Marginalised sections especially SC, ST and Women which will lead to equality as envisaged under Article 14 of the Indian Constitution.

  4. It will help MSME industries in adopting modern technologies.

  5. It will lead to skill development of employees which will make them more competitive at their work. This will help them in taking advantage of globalisation.

  6. It will lead to increased financial literacy.


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