GNPA Under PM Mudra Yojana

In the financial year 2024-25, the Gross Non-Performing Assets (GNPA) under the PM Mudra Yojana saw a slight increase to 2.21 per cent. This is compared to 2.1 per cent in the previous fiscal year. The data was released by the Finance Ministry, denoting trends in loan repayment and new initiatives within the scheme.

Overview of PM Mudra Yojana

The PM Mudra Yojana was launched to provide financial support to small and medium enterprises. It aims to facilitate easy access to credit for entrepreneurs. The scheme offers loans up to ₹20 lakh without collateral. It has empowered many small business owners across India.

GNPA Trends

The GNPA rate had peaked at 3.61 per cent in 2020-21. However, it showed a consistent decline until 2023-24. The recent increase to 2.21 per cent indicates a need for monitoring. Loans become non-performing if three consecutive monthly repayments are missed.

Introduction of Tarun Plus

A new category called ‘Tarun Plus’ was introduced in October 2024. This initiative was part of the budget announcements aimed at enhancing support for entrepreneurs. It allows borrowers who have successfully repaid previous loans under the ‘Tarun’ category to access loans of up to ₹20 lakh.

Beneficiary

In the first four months of its launch, ‘Tarun Plus’ attracted around 25,000 beneficiaries. These loans amounted to ₹3,790 crore. The initiative has received a positive response from the entrepreneurial community.

Loan Disbursement Statistics

Since its inception, the PM Mudra Yojana has sanctioned over 52.37 crore loans, totalling ₹33.65 lakh crore. Approximately 20 per cent of these loans have been given to new entrepreneurs. The average loan size has increased , from ₹40,000 to ₹1.05 lakh.

Demographic Distribution

The scheme has made notable strides in promoting inclusivity. About 68 per cent of loans have been disbursed to women entrepreneurs. Additionally, 50 per cent of the loans have gone to borrowers from Scheduled Castes, Scheduled Tribes, and Other Backward Classes.

Future Prospects

The PM Mudra Yojana continues to be important programme for small businesses in India. With an annual loan sanctioning of ₹5-6 lakh crore, it plays a vital role in the economy. The average GNPA under the scheme has been steadily decreasing, which reflects positively on the repayment behaviour of borrowers.

Questions for UPSC:

1. Discuss the impact of the PM Mudra Yojana on entrepreneurship in India.
2. Critically examine the significance of collateral-free loans in promoting small businesses.
3. What are the trends in Gross Non-Performing Assets in India? Explain their implications on the banking sector.
4. What measures can be taken to enhance financial inclusion among women entrepreneurs in India? Discuss with suitable examples.

Answer Hints:

1. Discuss the impact of the PM Mudra Yojana on entrepreneurship in India.

1. Facilitates access to credit for small and medium enterprises, empowering entrepreneurs.
2. Over 52.37 crore loans sanctioned, contributing to business growth and job creation.
3. Supports new entrepreneurs with approximately 20% of loans directed to them.
4. Encourages women entrepreneurs, with 68% of loans granted to them.
5. Increases average loan size from ₹40,000 to ₹1.05 lakh, enhancing business capabilities.

2. Critically examine the significance of collateral-free loans in promoting small businesses.

1. Reduces barriers to entry for entrepreneurs lacking assets for collateral.
2. Encourages risk-taking and innovation among small business owners.
3. Promotes inclusivity by supporting marginalized groups, including women and SC/ST/OBC borrowers.
4. Facilitates quicker processing and disbursement of loans, aiding timely business expansion.
5. Enhances financial literacy and creditworthiness among borrowers, encouraging a culture of repayment.

3. What are the trends in Gross Non-Performing Assets in India? Explain their implications on the banking sector.

1. GNPA peaked at 3.61% in 2020-21 but has shown a decline to 2.21% in FY24.
2. Indicates improved repayment behavior among borrowers under PM Mudra Yojana.
3. High GNPA levels can lead to increased provisioning costs for banks, affecting profitability.
4. Lower GNPA rates enhance banks’ lending capacity and confidence in the economy.
5. Monitoring GNPA trends is critical for maintaining financial stability in the banking sector.

4. What measures can be taken to enhance financial inclusion among women entrepreneurs in India? Discuss with suitable examples.

1. Implement targeted financial literacy programs focusing on women entrepreneurs.
2. Increase access to collateral-free loans specifically designed for women, like ‘Tarun Plus’.
3. Support women-led startups through mentorship and networking opportunities.
4. Encourage government and private sector partnerships to fund women-centric initiatives.
5. Showcase successful women entrepreneurs as role models to inspire others.