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Pradhan Mantri Mudra Yojana
The Pradhan Mantri Mudra Yojana is the government’s flagship refinance and guarantee scheme aimed at providing access to credit for non-corporate and informal enterprises. Analysing the available data, the performance of the PMMY against its objectives is assessed, and it is observed that the PMMY has not altered secular trends in lending to the target segments. The current scheme design for its ability to create the level of impact needed is questioned, and some ideas on how to accelerate impact are also discussed.
The Pradhan Mantri Mudra Yojana (PMMY) is the flagship refinance and guarantee scheme of the Government of India, targeted at making access to inexpensive and suitable credit a reality for the universe of India’s non-corporate and informal enterprises. The scheme is administered through a non-banking financial institution registered with the Reserve Bank of India (RBI) called the Micro Units Development and Refinance Agency or MUDRA Bank. While not a banking company, as the name would suggest, the MUDRA Bank, first introduced in the union budget of 2015–16, was allotted a corpus of ₹ 20,000 crore, and a credit guarantee corpus of ₹ 3,000 crore.1 It is currently a wholly-owned subsidiary of the Small Industries Development Bank of India (SIDBI) and enjoys access to deposits under priority sector shortfall from banks to the tune of ₹ 5,000 crore in 2015–16 and ₹ 3,125 crore in 2016–17,2 which is in addition to budgetary allocations made annually. We analyse, using available data, the performance of this scheme against the objectives for which it was established, and put forth some ideas on how to accelerate its impact.
Characterising the Beneficiaries
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