Why in the News?
- Union Finance and Corporate Affairs Minister Nirmala Sitharaman said women entrepreneurs are accorded first priority under the Centre’s flagship Pradhan Mantri Mudra Yojana (PMMY) scheme which offers financial assistance to beneficiaries.
- She said that more than 60% of the loans provided under the PMMY scheme go to women entrepreneurs.
What’s in Today’s Article?
- About PMMY (Need, Objective, Features, Eligibility, Benefits, Achievements, etc.)
About Pradhan Mantri Mudra Yojana:
- Micro, Small and Medium Enterprises (MSMEs) often find it difficult to avail loans from banks via traditional borrowing channels due to lack of security and inadequate funds for paying off high-interest rates.
- To solve this, the Government of India launched the Pradhan Mantri MUDRA Yojana (PMMY) in 2015.
- PMMY provides loans up to Rs 10 lakh to the non-corporate, non-farm small/micro enterprises.
- MUDRA, which stands for Micro Units Development & Refinance Agency Ltd., is the financial institution set up by the Government to provide these loans.
- MUDRA provides funding to the non-corporate small business sector through various last-mile financial institutions like Banks, Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs).
- Eligible person can avail benefits under PMMY by applying for loan from any of the above-mentioned institutions.
- MUDRA does not lend directly to micro-entrepreneurs/individuals.
- These loans are classified as MUDRA loans under PMMY.
Categories of Loans under PMMY:
- Under the aegis of PMMY, MUDRA has created three products namely 'Shishu', 'Kishore' and 'Tarun' to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur.
Implementing Agency for PMMY:
- Monitoring of PMMY progress at the State level will be done through SLBC forum and at National level by MUDRA/Department of Financial Services, Government of India.
- For this purpose, MUDRA has developed a portal, wherein the Banks and other lending institutions directly feed their achievement details which are consolidated by the system and reports are generated for review.
Eligibility for PMMY:
- Any Indian Citizen who has a business plan for a non-farm income generating activity such as manufacturing, processing, trading or service sector.
- The applicant should not be a defaulter to any bank or financial institution and should have a satisfactory credit track record.
Benefits of PMMY:
- No Collateral Security: The borrowers do not need to furnish any form of collateral to procure these loans.
- Hence, you don't need to risk your personal or business property in order to secure some funds.
- Easily Available: This loan is easily available to entrepreneurs trying to set up micro-sized enterprises anywhere in India and in almost every industry domain.
- Defaulting Procedure: In case of defaulting the loan legally, due to unforeseen circumstances or for losses due to natural causes, the government bears the responsibility to repay the loan.
- Quick Capital: The loans under the MUDRA scheme are available to micro-sized enterprises in a quick, effortless manner. Loans of up to 10 lakh can be easily availed in this process.
- Empowering Women: Women entrepreneurs have added special concessional benefits to the loans offered under the MUDRA scheme.
- Rural Empowerment: The MUDRA Yojana loans are equally available to small-scale businesses in both rural and urban areas.
- Besides, rural locales benefit more from such loans due to greater accessibility.
- Flexible Repayments: Although you can choose to repay the loan in a shorter period, the time frame of loan repayment can also be extended for a period of up to 7 years.
- Multiple Credit Possibilities: The MUDRA scheme offers multiple opportunities to expand your micro-unit enterprise with facilities like cash credit, equipment financing, etc.
- MUDRA Card: You can also apply for a MUDRA card that provides instant and seamless access to funds and overdraft facilities.
Achievements of PMMY:
- More than 40.82 crore loans amounting to Rs. 23.2 lakh crore have been sanctioned since launch of the Scheme.
- Approximately 21% of the total loans have been sanctioned to New Entrepreneurs.
- Approximate 69% loans of the total number of loans have been sanctioned to Women Entrepreneurs & 51% loans have been sanctioned to SC/ST/OBC categories of borrowers.
- Category-wise breakup:
