India has 6.3 crore micro-enterprises that banks once considered too small to lend to, collateral-free. One scheme was built to fund exactly them.
Timeline
- 8 April 2015: Prime Minister Narendra Modi launched the Pradhan Mantri MUDRA Yojana (PMMY), for non-corporate, non-farm micro and small enterprises.
- 14 May 2020: The government announced a 2% interest subvention on prompt-repaying Shishu loans, under the Aatmanirbhar Bharat Package.
- 23 July 2024: The Union Budget 2024-25 announced a doubled loan limit, from ₹10 lakh to ₹20 lakh. This took effect on 24 October 2024, alongside a new “Tarun Plus” loan category.
- 26 June 2026: PMMY had sanctioned 59.14 crore loans, worth ₹41.71 lakh crore, cumulatively since launch.
💳 Must Know
1. Launch and Aim
- Launch PMMY was launched on 8 April 2015, to provide collateral-free credit to non-corporate, non-farm micro and small enterprises.
- Aim The scheme is aimed at bringing small entrepreneurs into the formal financial system. The Prime Minister called it “funding the unfunded.”
2. How PMMY Lends: Through MLIs, Not Directly
- No Direct Lending PMMY does not lend directly. Loans are given by Member Lending Institutions (MLIs): Scheduled Commercial Banks, Regional Rural Banks, Small Finance Banks, NBFCs, and Microfinance Institutions.
- MUDRA MUDRA (Micro Units Development & Refinance Agency Ltd) refinances these lending institutions. It is a wholly-owned subsidiary of SIDBI, set up specifically for this purpose.
3. Four Loan Categories
- Categories Loans fall into four categories, by the borrower’s stage of growth: Shishu (up to ₹50,000), Kishore (₹50,000 to ₹5 lakh), Tarun (₹5 lakh to ₹10 lakh), and Tarun Plus (₹10 lakh to ₹20 lakh).
- Tarun Plus Tarun Plus is a newer category, added in October 2024. It is only for borrowers who already took, and successfully repaid, a Tarun loan. It is not open to first-time applicants.
4. The Loan Limit Was Doubled
- Doubled The overall loan limit was doubled from ₹10 lakh to ₹20 lakh. This was announced in the Union Budget 2024-25, on 23 July 2024, and took effect from 24 October 2024.
5. Cumulative Scale
- Scale As of 26 June 2026, PMMY had sanctioned 59.14 crore loans, worth ₹41.71 lakh crore in total. See IndEco0132 — Financial Inclusion in India for this figure alongside India’s other major financial-inclusion schemes.
📋 Good to Know
6. The Mudra Card
- Mudra Card The Mudra Card is a RuPay debit card, issued to borrowers. It works like an overdraft facility, usable at ATMs and point-of-sale machines, and repayable flexibly as surplus cash becomes available.
7. Applying: App and Online Portals
- MUDRA MITRA The MUDRA MITRA mobile app guides prospective borrowers toward a suitable lender, and provides sample application forms.
- Online Loan applications can be submitted online, through the PSBloansin59minutes and Udyamimitra portals, rather than only in person at a bank branch.
8. What PMMY Loans Fund
- Scope PMMY loans fund income-generating activities in manufacturing, trading, and services, plus activities allied to agriculture. They are distinct from crop loans themselves.
Test Yourself
⚡ Great to Know
9. Women Borrowers Stay at the Smallest Loan Sizes
- Data PMMY’s own FY 2023-24 data shows a real skew. Among women borrowers that year, ₹1,08,472.51 crore was disbursed under Shishu, and ₹1,00,370.49 crore under Kishore. Only ₹13,454.27 crore went to the larger Tarun category.
- Takeaway This suggests most women-led micro-enterprises under PMMY stay at the smallest loan sizes. Very few “graduate” to Tarun-level borrowing, within a single year.
10. MUDRA’s First Bond Sale
- Diversification MUDRA itself began diversifying how it raises money. In October 2025, it announced its first-ever bond sale, aiming to raise up to ₹5,000 crore. This moves it beyond pure reliance on budgetary support and bank credit lines. (Source: Business Standard)
📰 Current Affairs
59.14 Crore Loans, ₹41.71 Lakh Crore, 26 June 2026
- Data As of 26 June 2026, PM Mudra Yojana had sanctioned 59.14 crore loans, worth ₹41.71 lakh crore, since its 2015 launch. (Source: PIB, via IndEco0132)
Loan Limit Raised to ₹20 Lakh, 24 October 2024
- Policy On 24 October 2024, the government implemented the Budget 2024-25 announcement raising PMMY’s loan limit to ₹20 lakh, and introduced the “Tarun Plus” category for graduated borrowers. (Source: PIB)
MUDRA’s First Bond Issuance, October 2025
- Data In October 2025, MUDRA announced plans for its first-ever bond issuance, seeking up to ₹5,000 crore, with an initial ₹2,000 crore tranche. Both CARE and ICRA rated the issuance AAA. (Source: Business Standard)
📝 Previous Year Question
UPSC CSP 2016 — What PMMY Is Aimed At
- UPSC 2016 Asked as: “Pradhan Mantri MUDRA Yojana is aimed at”. The correct answer is (a) bringing small entrepreneurs into the formal financial system. See UPSC CSP 2016 GS Paper I, Q73.
Leave a Reply