Reserve Bank Deputy Governor M.K. Jain on Tuesday raised concerns over the growing NPA levels in Mudra loans and asked banks to monitor these loans closely.
The Mudra loan scheme was launched by Prime Minister Narendra Modi in 2015 to help the highly under-funded small and medium industries with cheap bank loans. "Mudra is a case in point... while such a massive push would have lifted many beneficiaries out of poverty, there has been some concerns about the growing level of non-performing assets among these borrowers," Jain said at Sidbi event on microfinance. Bad loans as a percentage of MUDRA loans had risen in 2018-19 to 2.68 per cent, up 16 basis points from 2.52 per cent in the previous year. Of the 182.60 million MUDRA loans sanctioned, 3.63 million accounts defaulted as on March 31.
Jain said banks need to focus on repayment capacity at the appraisal stage itself and monitor loans through the life cycle much more closely.
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According to media reports, more than Rs 7.28 lakh crore have been disbursed to 3.27 crore marginal and small entrepreneurs, including SCs and STs, under the Pradhan Mantri Mudra Yojana (PMMY) in the last three financial years. Between April 2019 and October 25, 2019, Rs 1,25,088.58 crore loans were sanctioned to 240.03 lakh borrowers. Of this, 68 percent (163.02 lakh) were women borrowers, and 19 percent (163.02 lakh) new entrepreneurs. 129.70 lakh ST/OBC borrowers constituted 54 percent of the total.
The PMMY was launched by the Prime Minister on April 8, 2015 for providing loans up to 10 lakh to the non-corporate, non-farm small/micro enterprises. About 42.5 million people had received loans under the Mudra scheme, of which only one-fifth used it to set up a new establishment. It was launched in April 2015 for providing loans up to ₹ 10 lakh to non-corporate, non-farm small/micro enterprises.
(With PTI inputs)