iGauravMahajan

Mudra loan NPAs at just 3.3% in 7 years

Finance, Loans, Mudra, MSME

Mudra loans do not require any collateral/ security, and hence were perceived to be very risky. But Non-performing assets of banks for Mudra loans – including those extended during the Covid-19 pandemic when small enterprises were the worst hit – are lower than the average NPAs of the sector as a whole. Bad loans under the Pradhan Mantri MUDRA Yojana for all banks (public, private, foreign, state cooperative, regional rural and small finance) since the launch of the scheme on April 8, 2015, is just 3.38 per cent of the total disbursements of Rs 13.64 lakh crore under the scheme during the period, almost half of the banking sector as a whole which stood at 5.97 per cent for the year-ending March 31, 2022.

The Micro Units Development & Refinance Agency (MUDRA) was launched on April 8, 2015, by Prime Minister Narendra Modi to provide loans up to Rs 10 lakh to non-corporate, non-farm, small and micro enterprises. Called the Pradhan Mantri Mudra Yojana, loans are given under three categories: Shishu up to Rs 50,000, Kishore Rs 50,001 to Rs 5 lakh, and Tarun from Rs 5 lakh to Rs 10 lakh.

Within the three categories, the NPAs for Shishu loans (up to Rs 50,000) were the lowest at 2.25 per cent of disbursements and the highest for Kishore loans (Rs 50,001 to Rs 5 lakh) at 4.49 per cent. For Tarun loans (over Rs 5 lakh up to Rs 10 lakh), bad loans were 2.29 per cent of disbursements. 

Public sector banks accounted for almost 46 per cent of all Mudra loans in value term, while Private Sector banks account for 36 per cent. In terms of the number of accounts they catered to, Private Banks serviced 10.46 crore beneficiaries or almost 53 per cent of the total 19.78 crore loan accounts. Public sector state-owned banks covered 4.66 crore beneficiaries, or under 24 per cent of the total Mudra loan accounts.

Public sector banks accumulated bad loans of Rs 31,025.30 crore, which is 4.98 per cent of their disbursements of Rs 6,23,279.85 crore. Private banks have far better recovery. For them, bad loans or non-performing assets during the seven-year period stood at Rs 6,469.2 crore, just 1.32 per cent of their disbursements of Rs 4,90,652.6 crore.

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