Mudra Loan Disbursals Show Marginal Decline in H1 FY25 Amid High Growth Base

New Delhi, Oct 3 (KNN) In a notable shift, the disbursal of Pradhan Mantri Mudra Yojana (PMMY) loans has experienced a slight decline in the first half of the current financial year, totaling Rs 1,86,284 crore as of September 27, 2024.

This marks a decrease from Rs 1,91,863 crore in the corresponding period of the previous year, signalling a trend that diverges from the robust growth seen in recent years.

A senior official from Mudra emphasised that these figures are provisional and indicated that even if disbursals see a marginal uptick, they would still fall short of last year's numbers.

“The marginal fall should not be seen as a dip, as the first half of the last fiscal year witnessed an unprecedented growth of about 40 percent in PMMY disbursals compared to the previous year. The high base effect should be factored in while examining the numbers,” the official stated.

The financial year 2023-24 was exceptional for PMMY, with loan disbursals surpassing the Rs 5 lakh crore milestone for the first time since the scheme's inception in 2015.

This remarkable achievement was indicative of a growing entrepreneurial spirit among small businesses and a recovery in economic activities post-COVID-19.

Despite the initial decline in loan disbursals this year, bankers remain optimistic about future growth. A senior official from the State Bank of India (SBI) highlighted a recent government decision to double the cap on Mudra loans from Rs 10 lakh to Rs 20 lakh for borrowers who have demonstrated a successful repayment history.

“This policy shift is likely to stimulate not just disbursals but also broader economic activities. We anticipate a rebound in PMMY performance in the full-year figures for FY25,” he remarked.

Mudra loans are categorised into three tiers: Sishu (up to Rs 50,000), Kishore (above Rs 50,000 and up to Rs 5 lakh), and Tarun (above Rs 5 lakh and up to Rs 10 lakh).

Starting this year, loans of Rs 20 lakh will be available to eligible borrowers at the discretion of banks, further incentivising responsible borrowing and repayment.

Additionally, the health of PMMY loans has shown improvement, with non-performing assets (NPAs) declining significantly. According to data from the Ministry of Finance, NPAs fell to 3.4 percent in 2023-24, down from 4.9 percent in 2019-20.

This positive trend underscores the growing effectiveness of the Mudra scheme in supporting small businesses and promoting financial inclusivity.

(KNN Bureau)