MUDRA loans remain mostly unaffected by rising number of bad loans under the Pradhan Mantri Mudra Yojana (PMMY), despite concerns that increased lending under the scheme could lead to a surge in bad loans. According to the 2017-18 annual report of PMMY, while gross non-performing assets (NPA) across all sectors in the country crossed 10% in fiscal 2017-18, the NPA level under PMMY was only 5.38% as on March 31, 2018.
Launched in 2015, PMMY is a scheme to provide loans up to Rs 10 lakh to non-corporate, non-farm small and micro-enterprises. These advances are classified as Mudra loans and provided by commercial banks, regional rural banks, small finance banks (SFBs), cooperative banks, microfinance institutions and NBFCs.
In the financial year 2017-18, overall loans worth Rs 2.54 lakh crore were classified as Mudra loans, an increase of 41% from Rs 1.80 lakh crore of loans sanctioned in this category in the last financial year. For 2018-19, a target of Rs 3 lakh crore has been set.
This is the first time that the bad loan data has been released by Micro Units Development & Refinance Agency (Mudra), which had said in its last annual report that it has begun the process of tracking bad loans in the portfolio of Mudra loans.
NBFCs sanctioned approximately Rs 27,000 crore of Mudra loans during the fiscal as against Rs 92,492.68 crore sanctioned by public sector banks. However, the year-on-year growth of loans to small businesses by NBFCs was faster this year than others as NBFC Mudra loans sanctions rose 396% from last fiscal compared with just 29% increase of Mudra loans by state-run banks. SFBs also witnessed a robust growth at 183% to Rs 19,022.89 crore on a year-on-year basis.
While AU Small Finance Bank was the top lender among Small Finance Banks (SFBs), sanctioning amount of Rs 4,614.4 crore to 117,000 borrowers, the State Bank of India (SBI) was the top lender among state-run banks with RS 28,791 crore to 14.1 crore borrowers, followed by Canara Bank (Rs 7,665 crore) and Punjab National Bank (PNB) Rs 6,838 crore.
According to the report, a total of 577 crore small businesses and micro units are there in the country and majority of them are owned by people belonging to the scheduled caste, scheduled tribe or other backward classes. Of these, less than 5% have access to formal credit, while others rely on informal sources to fund their businesses, the report said.