Mudra Loans Hit Record ₹3.39 Lakh Crore in Q3 FY25
Updated: January 20, 2025 | Hyderabad
The Pradhan Mantri Mudra Yojana (PMMY) has achieved a historic milestone, with loan disbursals reaching ₹3.39 lakh crore in the third quarter of FY25, ending December 2024. This achievement underscores the government's commitment to fostering small businesses, promoting self-reliance, and accelerating entrepreneurial growth across India.
Q3 FY25 Performance: A Record-Breaking Quarter
Mudra loans reached an all-time high in Q3 FY25, reflecting a remarkable 16% year-on-year growth compared to the ₹3 lakh crore disbursed during the same quarter last year. This performance also compensates for the sluggish start to the fiscal year, as loan disbursals in the first half of FY25 dropped to ₹1.86 lakh crore from ₹1.91 lakh crore in H1 FY24.
The impressive rebound in Q3 highlights the increasing reliance on Mudra loans by small businesses and micro-enterprises to recover from pandemic-induced economic challenges and to drive growth.
Mudra Loans: Driving Growth in Three Key Categories
The PMMY offers loans across three categories to cater to a wide range of entrepreneurs:
- Sishu: Loans up to ₹50,000 for small start-ups and early-stage micro-businesses.
- Kishore: Loans between ₹50,000 and ₹5 lakh for expanding small businesses.
- Tarun: Loans between ₹5 lakh and ₹10 lakh, with a new upper cap of ₹20 lakh introduced for borrowers with excellent repayment histories.
The increase in the Tarun loan cap has been a game-changer, enabling established micro-enterprises to access larger funds while fostering disciplined repayment behavior.
Who is Lending?
A wide range of financial institutions is involved in disbursing Mudra loans, including:
- Public and Private Sector Banks: State Bank of India (SBI) leads the pack in terms of Mudra loan distribution.
- Regional Rural Banks: Serving entrepreneurs in semi-urban and rural areas.
- Small Finance Banks and NBFCs: Providing accessible financial solutions to underserved communities.
- Micro-Finance Institutions (MFIs): Targeting ultra-small businesses and low-income groups.
Since the scheme’s inception in 2015, these institutions have consistently exceeded the targets set by the Government of India, demonstrating their unwavering commitment to supporting small businesses.
A Shift in NPA Trends
One of the most notable aspects of Mudra loans is the improvement in asset quality. Non-performing assets (NPAs) under PMMY loans have steadily declined from 4.9% in FY20 to 3.4% in FY24. This reduction can be attributed to better screening processes, disciplined repayment practices, and increased awareness among borrowers.
Empowering Women Entrepreneurs
Mudra loans are also instrumental in fostering women’s entrepreneurship. Approximately 68% of Mudra loan borrowers are women, highlighting the program’s role in driving gender inclusivity in the entrepreneurial ecosystem. These loans not only empower women financially but also contribute to community development by encouraging small-scale employment generation.
Why Mudra Loans Matter
The Pradhan Mantri Mudra Yojana plays a vital role in India’s economic landscape by:
- Promoting Self-Reliance: By providing access to affordable credit, the scheme helps individuals and small businesses become financially independent.
- Boosting Employment: Mudra loans enable micro-enterprises to grow, creating job opportunities at the grassroots level.
- Encouraging Economic Growth: With consistent annual growth in loan disbursals, the scheme has become a critical driver of the country’s GDP.
- Fostering Financial Inclusion: PMMY ensures that underserved and marginalized communities have access to formal credit systems.
Conclusion
The record-breaking ₹3.39 lakh crore disbursal under PMMY in Q3 FY25 highlights the resilience and potential of India’s small businesses and micro-enterprises. By addressing the unique needs of entrepreneurs through flexible loan categories and fostering repayment discipline, Mudra loans have become a cornerstone of India’s entrepreneurial ecosystem.
With policy support, declining NPAs, and an increasing focus on women entrepreneurs, Mudra loans are poised to further transform the country’s small business landscape in the coming years.
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