The Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme launched by the Government of India to provide financial assistance to micro, small, and medium enterprises (MSMEs) across the country. Launched on April 8, 2015, by Prime Minister Narendra Modi, PMMY aims to support entrepreneurship and promote small business development by providing access to affordable credit.
The primary objective of PMMY is to facilitate financial inclusion by extending loans to entrepreneurs in the unorganised sector, including individuals engaged in manufacturing, trading, and services activities. By providing financial support to small businesses, PMMY seeks to create job opportunities, boost economic growth, and foster innovation and skill development.
Under the PMMY framework, loans are categorised into three segments or stages, known as ‘Shishu,’ ‘Kishor,’ and ‘Tarun,’ based on the stage of growth and funding requirements of the enterprise.
- Shishu: This category caters to small business ventures in their initial stages, offering loans up to Rs. 50,000. These loans are targeted at budding entrepreneurs who require modest capital to kickstart their business activities, purchase equipment, or meet working capital needs.
- Kishor: The Kishor category provides loans ranging from Rs. 50,001 to Rs. 5,00,000, catering to enterprises that have grown beyond the initial stage and require higher funding for expansion, diversification, or capacity enhancement.
- Tarun: The Tarun category offers loans ranging from Rs. 5,00,001 to Rs. 10,00,000, targeting established businesses seeking further expansion or diversification. These loans provide greater financial assistance to entrepreneurs with proven track records and larger funding requirements.
Prime Minister Narendra Modi has been a staunch advocate of promoting entrepreneurship and fostering economic empowerment among the masses, particularly in rural and semi-urban areas. Recognising the importance of MSMEs in driving economic growth and employment generation, PM Modi has championed initiatives like PMMY to provide much-needed financial support and encouragement to aspiring entrepreneurs.
Through PMMY, the government aims to address the financing gap faced by small businesses, especially those belonging to traditionally underserved sections of society such as women, SCs, STs, and OBCs. By facilitating access to institutional credit at affordable interest rates, PMMY empowers individuals to pursue their entrepreneurial dreams, contribute to economic development, and improve their livelihoods.
Since its inception, PMMY has made significant strides in disbursing loans to MSMEs across the country, enabling millions of entrepreneurs to start or expand their businesses. According to government data, PMMY has facilitated the disbursal of over Rs. 16 lakh crore worth of loans to more than 30 crore beneficiaries as of December 2021.
Furthermore, PMMY has played a pivotal role in promoting financial inclusion and empowering women entrepreneurs, with a substantial portion of loans disbursed under the scheme going to female-owned enterprises. The scheme has also been instrumental in fostering innovation, promoting self-employment, and reducing dependency on informal sources of credit.
In addition to providing financial assistance, PMMY emphasises the importance of financial literacy and skill development among MSME entrepreneurs. The government has implemented various capacity-building initiatives and training programs to equip entrepreneurs with the necessary knowledge and skills to manage their businesses effectively.
Overall, Pradhan Mantri Mudra Yojana stands as a testament to the government’s commitment to fostering entrepreneurship, promoting inclusive growth, and creating a conducive environment for small business development in India. With continued support and concerted efforts, PMMY is poised to play a transformative role in realising the vision of a vibrant and thriving MSME sector contributing to India’s economic resurgence.
MUDRA, which stands for Micro Units Development & Refinance Agency Ltd, is the financial institution established by the Government of India to implement and oversee the operations of PMMY. The agency plays a crucial role in providing development and refinancing facilities to micro-unit enterprises across the country.
The primary aim of PMMY is to promote financial inclusiveness and provide support to marginalized and socio-economically neglected segments of society. By facilitating access to affordable credit, PMMY empowers individuals from diverse backgrounds to pursue entrepreneurship and realize their business aspirations.
Since its inception, PMMY has made significant strides in fostering economic empowerment and fostering a culture of entrepreneurship among the masses. The scheme has provided a platform for millions of aspiring entrepreneurs to turn their ideas into reality, thereby contributing to job creation and economic growth.
By extending financial assistance to small and micro-enterprises, PMMY has not only helped in fulfilling the dreams and aspirations of individuals but has also instilled a sense of self-worth and independence among beneficiaries. The scheme has been instrumental in promoting inclusive development and reducing socio-economic disparities across the country.
It has emerged as a transformative initiative aimed at nurturing the spirit of entrepreneurship and empowering individuals to become self-reliant and economically self-sufficient. Through its comprehensive approach to financial inclusion, PMMY continues to play a pivotal role in driving socio-economic progress and creating opportunities for all sections of society.
These micro and small entities comprise of millions of proprietorship / partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits / vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others.
The loans under Pradhan Mantri Mudra Yojana can be availed through eligible Member Lending Institutions (MLIs), which include:
- Public Sector Banks
- Private Sector Banks
- State operated cooperative banks
- Rural banks from regional sector
- Micro Finance Institution (MFI)
- Non-Banking Finance Company (NBFC)
- Small Finance Banks (SFBs)
- Other financial intermediary approved by Mudra Ltd. as member financial institutions