What Happened
- Finance Minister Nirmala Sitharaman informed the Rajya Sabha on March 17, 2026, that a cumulative ₹39.48 lakh crore has been sanctioned under Pradhan Mantri MUDRA Yojana (PMMY) across 57.26 crore loans since the scheme's launch in April 2015.
- Non-Performing Assets (NPAs) under PMMY remain low at approximately 2% of total disbursed amount; within the Shishu category (smallest loans), NPAs are only 1.83%.
- During the last three years (April 2022 to March 2025), 18.37 crore loans worth ₹15.50 lakh crore were sanctioned, with about 65% going to women entrepreneurs and 19% to first-time borrowers.
- The FM highlighted MUDRA as a tool for financial inclusion of micro and small enterprises, particularly in the informal sector, which employs the majority of India's non-agricultural workforce.
Static Topic Bridges
PM-MUDRA Yojana: Architecture, Loan Categories, and Institutional Setup
Pradhan Mantri MUDRA Yojana (PMMY) was launched on April 8, 2015, under which the Micro Units Development and Refinance Agency (MUDRA) provides refinance to last-mile lenders — commercial banks, RRBs, MFIs, and NBFCs — who in turn extend collateral-free loans to non-corporate, non-farm micro enterprises. MUDRA is a subsidiary of SIDBI with an authorised capital of ₹1,000 crore and paid-up capital of ₹750 crore. The scheme targets income-generating microenterprises in manufacturing, trading, and services.
- Launch: April 8, 2015 (PM Narendra Modi)
- Total loans sanctioned (since inception): 57.26 crore loans worth ₹39.48 lakh crore
- Three loan categories:
- Shishu: Up to ₹50,000 (NPA: 1.83%)
- Kishore: ₹50,001 to ₹5 lakh
- Tarun: ₹5,00,001 to ₹10 lakh (limit doubled to ₹20 lakh via Budget 2024)
- Collateral: None required; Credit Guarantee Fund for Micro Units (CGFMU) backstops lenders
- MUDRA is a subsidiary of SIDBI; acts as a refinancing institution
Connection to this news: FM Sitharaman's Rajya Sabha statement cited these exact cumulative figures — ₹39.48 lakh crore and ~2% NPA — to defend MUDRA's credit quality and outreach to small entrepreneurs.
MSME and Informal Sector Credit Gap
India's Micro, Small, and Medium Enterprises (MSMEs) contribute approximately 30% of GDP, 45% of exports, and employ over 11 crore people, yet face a structural credit gap. The IFC–MSME Finance Gap report estimated India's MSME credit gap at ~$530 billion (approximately ₹40 lakh crore) — making collateral-free credit schemes like MUDRA critical. PM-MUDRA specifically targets the micro segment (enterprises with investment below ₹1 crore under MSMED Act, 2006 classification).
- MSME share of GDP: ~30%; share of exports: ~45%; employment: ~11 crore people
- MSMED Act, 2006: Defines Micro, Small, Medium by investment and turnover thresholds (revised 2020)
- Micro enterprise (revised 2020): Investment ≤ ₹1 crore AND turnover ≤ ₹5 crore
- IFC estimate of India's MSME credit gap: ~$530 billion
- Women entrepreneurs: 65% of MUDRA loans (last 3 years) — significant financial inclusion dimension
- First-time borrowers ("new to credit"): 19% of recent MUDRA loans
Connection to this news: The low NPA at ~2% for a collateral-free micro-credit scheme of this scale demonstrates that informal entrepreneurs are creditworthy — addressing the historical perception that micro-loans carry high default risk.
Non-Performing Assets (NPAs): Definition, RBI Framework, and Significance
An NPA is a loan or advance for which principal or interest payment has been overdue for more than 90 days. RBI's Prudential Norms (issued under Section 21 of the Banking Regulation Act, 1949) require banks to classify NPAs into Sub-Standard, Doubtful, and Loss categories with corresponding provisioning requirements. The 2% NPA figure for PM-MUDRA is notable because critics had warned that collateral-free micro-loans to informal enterprises would generate high defaults — a concern the government used this data to rebut.
- NPA definition (RBI): Loan/advance where interest or principal overdue for more than 90 days
- NPA categories: Sub-standard (up to 12 months), Doubtful (12 months to 3 years), Loss (beyond 3 years or identified as such)
- Provisioning norms: Sub-standard — 15%; Doubtful — 25–100%; Loss — 100%
- PM-MUDRA NPA: ~2% overall; Shishu category: 1.83%
- India's Gross NPA ratio (banking sector): ~3.4% (FY 2024–25) — MUDRA NPAs are lower
- Credit Guarantee Fund for Micro Units (CGFMU): Government-backed guarantee reduces risk for lenders
Connection to this news: The FM's emphasis on the 2% NPA figure in Parliament directly addresses questions about fiscal risk from large-scale collateral-free lending and validates the scheme's credit discipline.
Financial Inclusion: DBT, Jan Dhan, and the MUDRA Nexus
PM-MUDRA operates within India's broader financial inclusion architecture. The JAM (Jan Dhan–Aadhaar–Mobile) trinity created the account infrastructure; PM-MUDRA leverages it by channelling institutional credit to previously bank-excluded micro-entrepreneurs. Jan Dhan accounts have crossed 57.78 crore (as of 2026) with 55.8% women account holders. MUDRA's emphasis on women (65% of recent loans) and SC/ST/OBC beneficiaries makes it a key social equity tool alongside an economic one.
- Jan Dhan accounts: 57.78 crore (55.8% women beneficiaries)
- Total deposits in Jan Dhan accounts: over ₹2.94 lakh crore
- PMMY loans to women (last 3 years): 65% of sanctions
- PMMY new/first-time borrowers: ~19% of recent loans
- Refinancing chain: MUDRA → Banks/MFIs/NBFCs/RRBs → Micro enterprises
- CGFMU guarantee: Up to ₹10 lakh per borrower (eliminates collateral barrier)
Connection to this news: The FM's data validates that MUDRA has successfully extended formal credit to previously excluded segments, aligning with India's financial inclusion and women empowerment goals.
Key Facts & Data
- Total MUDRA sanctions since launch (2015): 57.26 crore loans worth ₹39.48 lakh crore
- Last 3 years (Apr 2022–Mar 2025): 18.37 crore loans worth ₹15.50 lakh crore
- NPA overall: ~2%; Shishu sub-category NPA: 1.83%
- Women beneficiaries (last 3 years): 65% of loans
- New/first-time borrowers: ~19% of recent loans
- Loan categories: Shishu (≤₹50,000), Kishore (₹50K–₹5L), Tarun (₹5L–₹20L post-2024 Budget)
- MUDRA is a subsidiary of SIDBI; authorised capital ₹1,000 crore
- Launch date: April 8, 2015