Mudra loans see record growth in Q3 FY24, reaching ₹3 lakh crore

In December 2023, the Pradhan Mantri Mudra Yojana (PMMY) records loans of ₹3 lakh crore, indicating a strong 16% annual growth. With 70% of the loans going to female businesses, they are essential

Loans disbursed under the Pradhan Mantri Mudra Yojana (PMMY) have skyrocketed to an unprecedented ₹3-lakh crore in December 2023, exhibiting a phenomenal 16% year-on-year growth. This is a hopeful development for small companies in the New Year.

Strong Loan Sanctions Trend

Recent data indicates that the total amount of loans approved has surpassed ₹2,99,457 crore just one week before the current fiscal year’s third quarter ends on December 22, 2023.

This exceeds the ₹2.58-lakh crore threshold reached in the corresponding period of the preceding fiscal year.

According to preliminary data, a strong performance was achieved on December 29 when the ₹3-lakh crore milestone was reached.

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Developing Female Entrepreneurs

According to government data, women have been the primary drivers of Mudra loan growth, accounting for almost 70% of loans that have been approved.

Moreover, a noteworthy quarter of these loans have been given to small business owners who are just starting out.

The “missing middle problem” in enterprise growth is addressed by recent findings from the State Bank of India (SBI) Research, which highlight good trends in disbursals, especially in the Tarun and Kishor category loans.

Portfolio Diversification and Operational Excellence

The distribution of loans in the Mudra loan portfolio is evenly distributed throughout the retail, services, and manufacturing industries.

The procedure, according to an SBI official, is designed to achieve operational excellence by utilizing digitization before and after disbursement.

Bank Exposure Safety

According to economist B Yerram Raju, strict system-driven processes and entrepreneurial effort protect banks against unfavorable outcomes associated with loans under PMMY.

Furthermore, there is complete guarantee on these loans, which reduces the risk for banks.

Raju, however, draws attention to the lack of interaction with business owners prior to and during the distribution of the Mudra loan, pointing out a possible area for enhancement in risk management and support systems.