Pradhan Mantri MUDRA Yojana (PMMY)

Millions of small shopkeepers and workshop owners ran their business without a bank loan. In 2015 the government built a scheme to reach them.

1.1 Who were the unfunded?

At the launch, the Prime Minister said small enterprises employ about 12 crore people. Large industries employ about 1 crore 25 lakh. He added that 5 crore 75 lakh self-employed people used funds of Rs 11 lakh crore. The average debt per unit was only about Rs 17,000.

He also said small entrepreneurs had long been used to exploitation by moneylenders. MUDRA was meant to change that.

1.2 What did the launch promise?

The Pradhan Mantri MUDRA Yojana (PMMY) was launched on 8 April 2015 in New Delhi. The Prime Minister described the aim as “funding the unfunded”. The Department of Financial Services says the aim is institutional, collateral-free credit for micro enterprises.

MUDRA stands for Micro Units Development and Refinance Agency. SIDBI says MUDRA was set up on 8 April 2015 as its wholly owned subsidiary.

Two names get mixed up all the time. One is a scheme. The other is an agency.

2.1 Is it PMMY or MUDRA?

PMMY is the scheme. MUDRA Ltd is the agency behind it. MUDRA gives refinance support to banks, microfinance institutions, NBFCs and other lenders, and they lend to the small business.

Reuters describes MUDRA as a non-banking finance company set up by the government in 2015. A borrower does not walk into MUDRA to ask for a loan.

2.2 Who are the lenders?

The loans are given by Member Lending Institutions (MLIs). The list is public sector banks, private banks, foreign banks, Regional Rural Banks, Small Finance Banks, NBFCs, Micro Finance Institutions and NBFC-MFIs. No collateral is required.

The loans are for income-generating work in manufacturing, trading and services. They also cover activities allied to agriculture, such as poultry, dairy and beekeeping. Crop loans are not part of it.

The categories follow the size of the loan. PIB says the names signify the stage of growth and the funding needs of the borrower.

3.1 What do Shishu, Kishore and Tarun cover?

• Shishu: loans up to Rs 50,000.
• Kishore: above Rs 50,000 and up to Rs 5 lakh.
• Tarun: above Rs 5 lakh and up to Rs 10 lakh.

The same scale has a fourth step, Tarun Plus, described next.

3.2 What changed in October 2024?

The Finance Minister announced in Union Budget 2024-25, on 23 July 2024, that the limit would rise from Rs 10 lakh to Rs 20 lakh. A new category, Tarun Plus, was added. It covers loans above Rs 10 lakh and up to Rs 20 lakh.

Tarun Plus is not an entry point. It is open only to borrowers who took and successfully repaid a loan under Tarun. The rule applies with effect from 24 October 2024. The Credit Guarantee Fund for Micro Units (CGFMU) covers PMMY loans up to Rs 20 lakh.

A PMMY borrower also gets a card, an app and some online help.

4.1 What is the Mudra Card?

The Mudra Card is a RuPay debit card. It gives working-capital credit as an overdraft facility. The borrower can draw cash at an ATM or from a Business Correspondent. The borrower can also pay at a point-of-sale machine.

Repayment is flexible. The borrower can repay when surplus cash is available. That lowers the interest cost.

4.2 How does a person apply?

MUDRA MITRA is a mobile app. It guides a loan seeker to approach a banker and has sample loan forms. Online applications can go through the PSBloansin59minutes and Udyamimitra portals. The Jan Samarth portal lists 15 credit-linked schemes.

In May 2020, under the Aatmanirbhar Bharat package, the Finance Minister announced 2% interest subvention on prompt repayment of Shishu loans, for 12 months.

Official figures show who the borrowers are. They also show how well the loans are repaid.

5.1 How many borrowers are women?

In a Lok Sabha reply of 16 March 2026, the Finance Ministry said approximately 65% of loans went to women entrepreneurs. About 19% went to new entrepreneurs or new accounts. These shares count loans, not rupees.

5.2 Which loan size do women use most?

PIB gave women-borrower figures for FY 2023-24. The disbursed amounts were Rs 1,08,472.51 crore under Shishu, Rs 1,00,370.49 crore under Kishore and Rs 13,454.27 crore under Tarun.

So the Tarun amount was far smaller than the other two. The brief does not say why. Treat it as a fact, not as a cause.

5.3 How are the loans repaid?

The same Lok Sabha reply lists non-performing assets (NPAs) as a share of disbursement. The data come from lenders on the Mudra portal.

• Shishu: 1.48% in March 2023, 1.17% in March 2024, 1.50% in March 2025.
• Kishor: 3.34%, then 2.66%, then 2.49%.
• Tarun: 2.54%, then 2.19%, then 2.10%.
• Tarun Plus: 0.29% in March 2025. The category began in October 2024.

Shishu rose in 2025 while the other two kept falling. The trend is not the same everywhere.

The scheme keeps growing. Its lender is also changing how it raises money.

6.1 How big is PMMY now?

As on 26 June 2026, PMMY had sanctioned 59.14 crore loans, worth Rs 41.71 lakh crore. PIB published this on 21 July 2026.

The Department of Financial Services page gave a smaller total as on 28 February 2025: 52.07 crore accounts and Rs 33.19 lakh crore sanctioned.

6.2 Why is MUDRA planning bonds?

On 9 October 2025, Reuters reported that MUDRA planned to raise up to 50 billion rupees through bonds, a first for it. Two unnamed sources said the first tranche would be 20 billion rupees. CARE and ICRA had given the bonds AAA ratings.

The aim is to widen its funding beyond budget support and bank credit lines. I could not confirm that the issue has happened.

PMMY is a favourite topic because its names, dates and limits are easy to swap.

7.1 Which points get mixed up?

PMMY is the scheme. MUDRA is the refinance agency. Do not say a borrower applies to MUDRA.

Do not call PMMY and Stand-Up India the same scheme. Stand-Up India began on 5 April 2016 for Scheduled Castes, Scheduled Tribes and women. It gives composite loans of Rs 10 lakh to Rs 1 crore to entrepreneurs above 18 years, for greenfield projects. PMMY is open to any eligible micro-entrepreneur, up to Rs 20 lakh.

Do not say any first-time borrower can take Tarun Plus. It is only for those who repaid a Tarun loan.

UPSC Prelims 2016 asked what PMMY is aimed at. The PYQ section below has it.

What did UPSC ask in 2016?

UPSC CSP 2016 Q73 asked what PMMY is aimed at.

The key is (a), bringing small entrepreneurs into the formal financial system.

The other options name crop loans, pensions and funding for voluntary organisations. PMMY does none of these.