“PRADHAN MANTRI MUDRA YOJANA (PMMY): CRITICAL REVIEW”

Major Research Project

DISSERTATION
Submitted to
Veer Bahadur Singh Purvanchal University, Jaunpur
in partial fulfilment of the requirements of the II year (IV Semester)
Master’s Degree Programme in COMMERCE
By

Sameer Tiwari
(Research Scholar)
Under The Supervision Of
Mr. Avaneesh Kumar
(Assistant Professor)
Department Of Commerce

Session: 2023-24

College: Tilak Dhari P.G. College, Jaunpur

Examination Roll No: Enrollment No:

23601048588 PU19/104108
'विद्या ददावि विनयम्'
 CERTIFICATE

This is to certify that the Project Dissertation titled “PRADHAN MANTRI MUDRA
YOJANA (PMMY): CRITICAL REVIEW”, is a bona fide work carried out by SAMEER
TIWARI of M.COM -IV semester 2023-24 and submitted to Tilak Dhari P.G. College,
affiliated with Veer Bahadur Singh Purvanchal University, in partial fulfilment of the
requirement for the award of the Degree of Masters.
This is his own work and facts reported by him personal findings and deep investigations.

Date: / /
Place:

SIGNATURE OF GUIDE RESEARCH SCHOLAR

Mr. Avaneesh Kumar Sameer Tiwari

(Assistant Professor) (M.Com-IV Semester)
Department Of Commerce Department Of Commerce

SIGNATURE OF PRINCIPAL

Dr. Alok Kumar Singh

(T.D P.G College Jaunpur U.P)
 DECLARATION

I, SAMEER TIWARI, student of M.COM-IV Semester 2022-23 of Tilak Dhari P.G. College,
affiliated with Veer Bahadur Singh Purvanchal University, hereby declare that Major Research
Report on “PRADHAN MANTRI MUDRA YOJANA (PMMY): CRITICAL REVIEW”
submitted in partial fulfilment of Degree of Masters of Commerce, is the original work
conducted by me. The information and data given within the report is authentic to the best of
my knowledge. This report is not being submitted to any other University for award of any
Degree, Diploma and Fellowship.

Date: / / Research Scholar

Sameer Tiwari
(M.Com-IV Semester)
Department Of Commerce
Roll No: 23601048588
 ACKNOWLEDGEMENT

Due to the very fact that all the information and knowledge needed was not within the
literature, it was of vital importance that the people those who guide be very resourceful and
knowledgeable. I would like to thank Mr. Avaneesh Kumar, Assistant Professor for his
guidance and help in all the matters, whenever required.
I really appreciate his involvement in the project and the regular advices that helped me refine
the project as I went along and also inculcate all the points that help significantly with the
growth in my learning.
I express my sincere thanks to my Best friend and all the Friends and classmates who directly
or indirectly participated and helped me in successfully preparing the Project dissertation. I
am thankful to my parents and peer and all the members of the department of commerce who
gave valuable information on the part of my Project Dissertation.

Date: / /

SAMEER TIWARI
(M.Com-IV Semester)
Department Of Commerce
Roll No: 23601048588
 TABLE OF CONTENTS

CHAPTERS PARTICULARS PAGE NO.

Certificates
Declaration
Acknowledgement

Abstract 1
Chapter 01: Introduction 2-5
Chapter 02: Literature Review 6-10
Chapter 03: Research Methodology 11-14
Chapter 04: Data Presentation, Analysis And Interpretation 15-22
Chapter 05: Financial Status 23-26
Chapter 06: Findings And Suggestions 27-30
Chapter 07: Conclusion 31-33

References 34-36
 Abstract

Small enterprises play a key role in the development of developing countries, which are
facing a problem of high unemployment. The main problem in the establishment of small
enterprises is the scarcity of finance. To promote the small enterprises, government started a
scheme known as Pradhan Mantri MUDRA Yojana (PMMY) in 8 April 2015. The study
revealed the performance of banks in the sanction of loans under PMMY scheme at districts
level as well as category-wise in Uttar Pradesh state exclusively. To fulfil the objectives of this
descriptive cum analytical study required data has been collected from the State Level
Banker’s Committee, Uttar Pradesh.
Results of the study depict that private banks provide more loans under Shishu category
when compared other two categories of MUDRA loans. This is because the loan amounts
under Kishore and Tarun category are much higher, and therefore, riskier to private banks.
Furthermore, the analysis of district-wise performance of the PMMY symbolizes that under
Shishu category, semi urbanized large districts have the highest number of beneficiaries and
amount sanctioned.
For the Kishore and Tarun categories, most urbanized and thickly populated districts shares
for the largest proportions. But the darker side district-wise performance of the PMMY is that
rural and backward districts show extremely no contribution in all the categories of PMMY in
Uttar Pradesh This is really a major issue of concern and need immediate attention.
Till 2019, a cumulative amount of ₹ 8.93 lakh crores has been sanctioned under the
programme, benefiting 18.25 crore loan accounts. The Pradhan Mantri Mudra Yojana for FY
2018-19, was at ₹ 3 lakh crore, which was distributed among the banks, Microfinance
Institutions MFIs and Non-Banking Financial Companies (NBFCs).
The objective of this paper is to analysis the Pradhan Mantri Mudra Yojana with particular
reference to the Uttar Pradesh states. It will also examine the distribution pattern for the
development of each respective sectors.
Keywords: MUDRA, financial inclusion, MSMEs.
1
 Chapter 01
INTRODUCTION

2
1. INTRODUCTION :
The development of small enterprises is one of the key factors to enhance the economic
growth of a country. Beside contribution in GDP, small enterprises have the capacity to
generate employment opportunities significantly. In developing countries like India where the
population is very high and unemployment is a major socio-economic problem, the role of
small enterprises becomes very vital. The main problem in the establishment of a small
business enterprises is the lack of entrepreneurship ability and scarcity of finance. The
Government of India (GOI)has launched its MUDRA (Micro Units Development and
Refinance Agency) Bank initiative on April 8, 2015. It is a financial initiative for facilitating
micro-units and providing them with sufficient funds to help them develop their business.
The GOI has started Pradhan Mantri MUDRA Yojna (PMMY) to promote small
entrepreneurs and take a step to bring them to the formal sector of the economy. It comes with
the moto of “fund the unfunded” i.e. this scheme primarily intends to provide financial
assistance the weaker and backward section of the society. This is a focused entity toward
enhancing the flow of fund to the micro and small sector which will ultimately lead to social
and financial inclusion in the economy (Shiny, 2017). As a financial tool, PMMY is quite
effective in its initial stage and it has the capacity to boost Micro, Small and Medium
Enterprises (MSMEs) sector (Chowdappa, et al.,2017).
The financial support by this scheme in the form of categorically designed loans encourages
aspirants of entrepreneurship to start new ventures, and moreover, empowers them by
providing self-sufficiency in terms finance (Mahajan, 2018). Financial inclusion is one another
objective of PMMY. Financial inclusion through PMMY increases the opportunities for credit
requirement and refinance (Godha and Nama, 2017).
The MUDRA loan provided under PMMY comes in three categories namely Shishu, Kishore
and Tarun. Under the Shishu category, a loan up to Rs. 50,000 is provided to those
entrepreneurs who are at the initial stage of business or seeking to start a business; the loan
amount, in case of Kishore category is up to Rs. 5 lakh for those who want to expand their
operation; and sanctions up to Rs.10 lakhs comes under the category of Tarun. Overall 27
public sector banks, 31 regional rural banks, 17 private sector banks, 36 microfinance
institutions, 25 non-banking financial institutions and 4 co-operative banks have been
selected for disbursing this loan as of now. 60 percent of the loans under the scheme to be

3
offered via Shishu option and the remaining 40 percent would be via Kishore and Tarun
categories.
Alongside the MUDRA, the Prime Minister also launched the Pradhan Mantri Mudra Yojana
(PMMY) a scheme to extend a loan to micro-enterprises. The Pradhan Mantri Mudra Yojana
(PMMY) has completed four years. During the first year 2015-16, the target amount was 1.22
lakh crore under PMMY, and total amount sanctioned was 1.37 lakh crore by Banks and Micro
Finance Institutions (MFI).
On the second years 2016-17, the target amount was at 1.80 lakh crore, and the same amount
was sanction by Banks, Micro Finance Institution (MFI), Small Finance Banks (SFBs), and
Non-Banking Financial Companies (NBFCs). In 2017-18 there was a significant increase in
the target amount which was₹ 2.44 lakh crore and amount sanction₹ 2.53 lakh crore, which
was more than the target.
During fiscal years 2018-19, the target amount was ₹3 lakh crore and ₹3.21 lakh crore was
sanctioned, which more than the target amount. In these four years of completing of PMMY,
the total amount sanction was₹ 8.93 lakh crore to 18.25 crore of Accounts. Out of which 70
per cent loan accounts, sanctioned belong to women beneficiaries and 52 percent of the loan
account belong to SC/ST and OBC.
The present study focuses on addressing the coverage and distribution of MUDRA loan in
entire Uttar Pradesh state and try to underline the disparity therein by applying descriptive cum
analytical approach.
1.1 MUDRA Loan Category:

Source: MUDRA.Org.in

4
1.2 Objectives of the Study :
The statistics of PMMY reflects gigantic success not only at national level but also at state
level as in Uttar Pradesh in terms of number of beneficiaries and total amount of loan
sanctioned. By now, PMMY has almost completed Nine years.
In this context, it is important to know and analyse the coverage of PMMY in terms of the
bank-wise and districts wise distribution with its progress of PMMY in Uttar Pradesh state.
Therefore, this study focuses on attainment of following objectives;
❖ To analyse the bank-wise distribution and progress of MUDRA loan under PMMY in Uttar
Pradesh.
❖ To examine district-wise coverage and trends of MUDRA loan under PMMY in Uttar
Pradesh.

5
CHAPTER 02
Literature
review

6
2. LITERATURE REVIEW:
So far, only a few studies have been done in the context of PMMY. Most of them talk about
its modalities, objectives, importance or challenges. No study is found that analytically probes
bank- wise and district-wise distribution of it in any of the states exclusively.
❖ Gupta (2015): highlighted the functioning and offering of MUDRA. This study offers
a clear concept of MUDRA Yojana through the detailed description of function, roles
and responsibility of MUDRA. It also provides insight on financial inclusion by
enabling different micro finance activities and credit-plus approach for the development
and support service to the target audience. The study highlights the MUDRA Yojana as
a game changing idea, with an indigenously conceived architecture, especially designed
for Indian context, which is likely to facilitate inclusion of last mile financiers and
thereby help expand access to finance for micro enterprises.

❖ Roy (2016): investigated PMMY and its key objectives, the role and importance of
MUDRA bank towards the small business unit or the micro finance institutions is
discussed precisely in the study. The study also attempts to know and visualize different
scheme under PMMY. Data from various secondary source is collected to depict a
picture of loan sanctioned and distributed under the PMMY for different category of
borrowers. The study concludes with the importance of MUDRA Yojana and envisaged
the efficiency of it in the context of its vital role in boosting small and micro businesses
in India.

❖ Shahid & Irshad (2016): attempted to study the objectives and product offerings of
MUDRA bank and analyzed the working MUDRA Bank in Karnataka. The study
revealed that there is a progress in MUDRA Yojana in Karnataka by comparing between
2015-16 and 2016-17. The study used secondary data and descriptive tools to portray
the overview of the PMMY scheme.

❖ Jindal and Bhardwaj (2016): highlighted the importance of entrepreneurship in a

developing country like India as it can lead to the generation of job opportunities and
more importantly contribute to the nation building. The government of India has
7
 introduced various initiatives for entrepreneurship development in the country. PMMY
is considered as one of the prestigious and promising initiative which can boost the
economy by promoting small and micro enterprises but the study recommends that
proper supervision and monitoring is compulsory to analyse the outcome of the scheme
on regular intervals.

❖ Soni (2016): commented on the legal framework required to avail benefits under the
MUDRA scheme. The applicants are required to have an adequate credit track record
and the necessary skills to begin the proposed activity. According to the study, MUDRA
Yojana as per the key objectives can stand with other initiatives like Make in India,
Startup India and Standup India campaign.

❖ Kavitha and Baag (2016): analyzed the banks‟ efficiency in execution of PMMY
scheme in India. The Data Envelopment Analysis approach has been used to find the
technical and scale efficiency of 42 banks in India and conducted a comparative analysis
between the private and public sector banks in the implementation of the PMMY
Scheme. The study found that public sector banks were successful in sanctioning and
disbursement of sanctioned loans compared to private sector banks. The study concludes
that there must be strict rules by the Government of India on the private sector banks to
provide MUDRA loans to startups and existing enterprises under the MUDRA scheme.

❖ Shiny (2017): opined that MUDRA Yojana can encourage more entrepreneurs to come
up with creative business ideas which can lead to the development of Indian economy.
MUDRA can act as an ideal regulator to collectivize and coordinate all the financial
institutions of micro and small sectors under an umbrella. The study anticipates that
MUDRA to take up the role of a development agency for providing credit services and
other related services of the small and micro enterprises.

❖ Godha and Nama (2017): keeping the major objective of “Fund the Unfunded”
opinioned that PMMY is a new financial inclusion initiative by the Government of
India. The study focused on the role, progress and achievement level of PMMY in the
state of Rajasthan. MUDRA scheme was successful in terms of the number of
sanctioned loans and its disbursement to small and micro enterprises in the state of
Rajasthan during the FY 2015-16 and FY 2016-17.

❖ Chowdappaet al., (2017): attempted to understand the role of MUDRA scheme on

achieving sustainable development in MSME and its complex nature. The study
analyses the mission, vision, objectives and product offerings of MUDRA scheme and
recognizes that they are in favour of development of MSMEs in a sustainable manner.
MUDRA scheme can definitely help to increase the contribution of MSME

8
 manufacturing sector towards GDP which has been steadily declining over the past
decades.

❖ Gupta et al., (2017): asserted the role of MUDRA Yojana in the advancement of
financial inclusion in the state of Jharkhand. The study found that the number of
sanctioned and disbursement amount of Shishu loan (54 percent) is much more than the
Kishore and Tarun in Jharkhand during the financial year 2016-17.

❖ Rajiv and Dhirender (2017): studied the impact of MUDRA loan scheme on micro
and small printing units situated in semi urban area in Hisar region. The study made use
of questionnaires to collect data from owners of hundred printing firms in the study area
and data were analyzed using graphical measures. It is found that 40 percent of the
printer units in the study used the MUDRA fund to upgrade their machinery into the
latest technology. The survey highlights that 48 percent of owners of printing units of
the selected units are expecting the increasing ceiling amount under the scheme.

❖ Agarwal and Dwivedi (2017): deployed a critical approach to study the state, caste and
category wise performance of the MUDRA scheme. SWOT analysis has been used to
understand the strength weaknesses opportunities and challenges associated with the
scheme. The study reveals that among the entrepreneurs‟ women are mostly benefited
by the scheme because the percentage share of disbursement in 2015-16 is 46 percent
and in 2016-17 it is 46.2 for women entrepreneurs. The paper recommended that the
scheme should also target the minority sector and extended to the personal sector other
than farms and factories.

❖ George and Nalini (2018): focused on the lead role played by the MUDRA Bank in the
growth of MSMEs. The study also analyses the performances of MUDRA bank in
Kerala and found that the MUDRA bank was successful in the delivery of MUDRA
products and disbursement of the sanctioned amount timely without much delay.

❖ Mahajan (2018): analyzed the impact and performance of MUDRA Yojana under The
PMMY in 2016 on the small business owners and self-employed people. Descriptive
statistical tools were used to analyze the data collected from the secondary sources.
Region-wise analysis of PMMY shows that all the four regions have received wide
coverage but the south region is more benefitted in the year.

Individual bank-wise performance shows that State Bank of India stands first among all
of the banks in terms of disbursement of MUDRA loan in the year. The study concludes
that if the products derived out of MUDRA scheme can earn foreign currency then it
can improve the demand of Indian Rupees in the international trade market. Thus, there
9
are only descriptive studies in the context of PMMY that describes the overview, nature,
vision, mission, product offerings etc. related to PMMY but hardly any analytical
studies are available in this field. The present study differs from the previous studies as
it is encompassing analysis of distribution of it exclusively in the context of the study
area.

10
 CHAPTER 03
RESEARCH
METHODOLOGY

11
3.1 RATIONALE OF THE STUDY:
The current government has implemented extensive programs under the Financial Inclusion
Program to make affordable financial services accessible to all sections of society. Financial
inclusion is therefore the big roadmap India needs to embark on in order to be fully successful.
We are miles away from reaching our stated goal, but the ball is moving. (Kesavan, 2015). The
harsh reality is that the world's poorest people still do not have any access to various
sustainable financial services such as savings, credit and insurance. A major task is to address
restrictions that exclude people from full participation in the financial sector (Patil, 2016).
Pradhan Mantri MUDRA Yojana Plays Key Role in India's Financial Inclusion It provides
funding for vulnerable entrepreneurs in the country.
3.2 STATEMENT OF THE PROBLEM:
Analysis of success of Pradhan Mantri MUDRA Yojana in financial inclusion and
development of SMEs.
3.3 SCOPE OF THE RESEARCH STUDY:
The scope of this study is that we can know the demand for what type of loan in India. This
will help the government to taking necessary decision regarding this Yojana. Small
entrepreneur can take necessary information regarding this scheme. This study also beneficial
for the banks, NBFC’s, cooperative banks to creation of demand of MUDRA Yojana.
3.4 RESEARCH OBJECTIVES: The key objective is to analyse the role of the Pradhan
Mantri MUDRA Yojana (PMMY) in financial inclusion and development of the MSMEs. In
this wider framework the following are the definite goals of the study:
❖ To analyse the penetration and success rate of PMMY in the Uttar Pradesh state.
❖ To explore and to analyse the role of PMMY in promoting Financial Inclusion in Indian
Financial System.
❖ To analyse the impact of PMMY in fostering businesses under MSME’s sector.
❖ To explore the challenges faced by new entrepreneurs in taking MUDRA loans from
PMMY.
❖ To analyse the perception and satisfaction of beneficiaries under MUDRA scheme.

12
3.5 RESEARCH HYPOTHESES:
The following research hypothesis were formulated to achieve the objective of the study.
Success rate of PMMY in Uttar Pradesh State:
➢ H01.1: There is no significant difference between Division Wise Loan Disbursement in
PMMY under Shishu Loan Category in Uttar Pradesh

➢ H01.2: There is no significant difference between Division Wise Loan Disbursement in

PMMY under Kishore Loan Category in Uttar Pradesh

➢ H01.3: There is no significant difference between Division Wise Loan Disbursement in

PMMY under Tarun Loan Category in Uttar Pradesh

➢ H01.4: There is no significant difference between Disbursement of MUDRA Loans in

Public and Private Sector Banks in Uttar Pradesh under Shishu loan category

➢ H01.5: There is no significant difference between Disbursement of MUDRA Loans in

Public and Private Sector Banks in Uttar Pradesh under Kishore loan category

➢ H01.6: There is no significant difference between Disbursement of MUDRA Loans in

Public and Private Sector Banks in Uttar Pradesh under Tarun loan category.
Role of PMMY promoting financial Inclusion
➢ H02: There is no significant difference between zonal Wise Loan Disbursement in
PMMY in India.

➢ H02.1: There is no significant difference between zonal Wise Loan Disbursement in

PMMY under Shishu Loan Category in India

➢ H02.2: There is no significant difference between Zonal Wise Loan Disbursement in

PMMY under Kishore Loan Category in India

➢ H02.3: There is no significant difference between Zonal Wise Loan Disbursement in

PMMY under Tarun Loan Category in India.
Fostering Business Factors

➢ H03: There is no significant impact on fostering business factors of the business of

Mudra loan beneficiaries and non-Mudra beneficiaries.
➢ H03.1: There is no significant impact on the net profits of the business of Mudra loan
beneficiaries and non-Mudra beneficiaries.
13
 ➢ H03.2: There is no significant impact on the net sales of the business of Mudra loan
beneficiaries and non-beneficiaries.

➢ H03.3: There is no significant impact on the business assets of the business of the Mudra
loan beneficiaries and non-beneficiaries.

➢ H03.4: There is no significant impact on production/services level of the business of the

Mudra loan beneficiaries and non-beneficiaries.

➢ H03.5: There is no significant impact on business brand image of the business of the
Mudra loan beneficiaries and non-beneficiaries.

➢ H03.6: There is no significant impact on business Innovations of the business of the

Mudra loan beneficiaries and non-beneficiaries.

➢ H03.7: There is no significant impact on entrepreneur skills of the business of the Mudra
loan beneficiaries and non-beneficiaries.

➢ H03.8: There is no significant impact on technology advancement of the business of the

Mudra loan beneficiaries and non-beneficiaries.

➢ H03.9: There is no significant impact on the number of Employees of the business of

the Mudra loan beneficiaries and non-beneficiaries.

➢ H03.10: There is no significant impact on Market Value of the business of the Mudra
loan beneficiaries and non-beneficiaries.
3.6 RESEARCH DESIGN:
Exploratory research designs involve exploring concepts and perceptions, while descriptive
studies inform the current situation of his PMMY in India. This research study used an
exploratory research design to examine various supporting business factors and challenges
those new entrepreneurs face when starting a business. On the other hand, if a descriptive study
design is used to describe current MUDRA loan payments and number of accounts opened in
Uttar Pradesh.

14
 CHAPTER 04
DATA
PRESENTATION,ANALYSIS
AND INTERPRETATION

15
4. DATA PRESENTATION:
The chapter is Presenting the accurate data of the research by Annual Report 2022-23 that
cover the penetration and success rate of PMMY in India, explore the role of PMMY in
promoting financial inclusion in the Indian financial system, analyse the impact of PMMY in
fostering businesses under MSMEs, analyse respondents' perceptions and satisfaction, and
describe the challenges faced by a new entrepreneur when availing of a MUDRA loan from
PMMY.
4.1 PMMY: Target vs Achievement:
Pradhan Mantri Mudra Yojana (PMMY), the Flagship Programme of the Prime Minister
aimed at Funding the Unfunded micro enterprises and small businesses, completed 8 years of
its operations, extending a cumulative amount of ` 22.89 lakh crore under the programme to
41.16 crore loan accounts, primarily benefitting the borrowers of weaker sections of the
society. The Lending Institutions, which include all the Public Sector Banks, Private Sector
Banks, Regional Rural Banks, Small Finance Banks, Micro-Finance Institutions (MFIs) and
Non-Banking Financial Companies (NBFCs), together have exceeded the annual targets set
out by the Government of India under PMMY every year.

16
 During these eight years, Micro Units Development & Refinancing Agency Ltd. (MUDRA),
as a support institution, has played a dual role by extending refinance support to various
lending institutions and monitoring the progress of implementation of PMMY closely through
a dedicated portal which captures various aggregated data pertaining to the scheme PMMY as
per the requirements of the Govt. of India.
4.2 PMMY during 2022-23 Agency wise Achievement:
The target set by the Government of India for disbursements under PMMY for the year 2022-
2023 was Rs 4.40 lakh crore which was distributed across various lending institutions viz
banks, MFIs and NBFCs based on their outreach and presence in various parts of the country.
The category-wise performance against their overall targets for the year 2022-23 is as follows:

17
Source: Secondary Data from Annual report 2022-23;
4.3 Assistance to less privileged sections:
PMMY, since its implementation, has focussed on providing incremental funding support to
the weaker sections of the society. The share of sub-categories of borrowers like SC, ST, OBC,
Women and Minorities under different categories of PMMY loans was analysed and details of
the same are given below.

18
19
 Out of the total amount disbursed, 47.74% went to the women borrowers. 52.67% of the
accounts in Shishu category belonged to women who were disbursed 24.92% of the amount
in the Shishu category. The reason for high share of women in Shishu category is lending of
micro-loans by the MFIs primarily to women. The share of the weaker section (SC/ ST/OBCs)
borrowers of the society in the PMMY programme was 50.48% in terms of loan accounts, and
36.41% in terms of loan amount disbursed. The shares of SC, ST and OBC category borrowers
were 10.50%, 3.84% and 22.07%, respectively, in terms of the number of loans disbursed.

20
Source: Annual PMMY Report 2022-23

21
4.4 PRADHAN MANTRI MUDRA YOJANA (PMMY)
DURING FY 2022-23:

More than 6.23 crore MSME Loan accounts were benefitted through PMMY during the year.
A snapshot of various categories of beneficiaries is presented in Table 2.

The high percentage of women in terms of the number of accounts is mainly due to the high
share of Micro Finance Institutions in Shishu loans, where women Borrowers mostly make up
the clientele. The share of special categories of borrowers – SC, ST, OBC, women, and
minority – under different schemes of PMMY continues to be significant in FY 2022-23.
The share of women borrowers stands at 71.03% by the number of accounts and 47.74% by
disbursement amount in FY 2022-23. The participation of the under-privileged sections (SC,
ST & OBCs) of the society in the PMMY program was 50.48% in terms of the number of loan
accounts, and 36.41% in terms of the loan amount disbursed. The share of SC, ST, and OBC
categories were 10.50%, 3.84%, and 22.07%, respectively, in terms of the number of loan
accounts disbursed in FY 2022-23. The Minority category of borrowers accounted for 12.06%,
in terms of the number of accounts and amount in FY 2022-23

22
 CHAPTER 05
FINANCIAL STATUS

23
5. FINANCIAL STATUS:
The Government of India, under Prime Minister Narendra Modi, had introduced many
flagship programmes to facilitate the micro and informal sectors which had largely benefitted
economically the smaller categories opposed to business giants. These accurate financial
instrument shows the current situation of The MUDRA Scheme.
BALANCE SHEET
as at March 31, 2023

24
Statement of Profit and Loss
for the year ended March 31, 2023

25
Statement of Cash Flows
for the year ended March 31, 2023

26
 CHAPTER 06
FINDINGS AND
SUGGESTIONS

27
6. CHALLENGES:
While MUDRA has given the much needed impetus/stimulus to micro enterprises, self
employed individuals and the huge unfunded sector of the society, certain factors both
systemic and institutional work to obstruct its effective implementation. Following are certain
observed factors that have to be addressed for realizing complete potential of MUDRA:
Banker’s Risk Appetite:
Bankers expressed some inhibition in disbursing loans with the lurking fear of increasing
number of NPAs. The inhibition is mainly with respect to applicants with no credit history or
guarantee. From a banker’s perspective, the lack of credit history is a palpable impediment for
approving the loan for first time (credit) applicants. In addition, since MUDRA applicants in
Delhi NCR are mostly migrants, such beneficiaries become difficult to track. It was also
observed that the reporting process also lags on several accounts and needs to be addressed.
Lack of awareness:
It has emerged as a bottleneck in ensuring equitable access to finance. More information on
government schemes and policies intended for mass public benefit needs to be disseminated
more effectively.
Capacity building and support:
Productive and formal employment generation depends on the availability of an adequately
skilled labour force through sustained investments in skills development and generating
opportunities for job creation through entrepreneurship. Under MUDRA, the applicants appear
to have little support with respect to soft skills required for sustenance of any venture.
Monitoring:
Monitoring the loan disbursal process including the beneficiaries and appropriate use of the
amount is a challenge and is required for ensuring targeted lending.

28
6.1 FINDINGS:
The MUDRA scheme has been the first phase of a major effort to create entrepreneurship
and jobs for the masses. The second phase of MUDRA may also bring about an angel of
sustainability to the efforts. Improving access to finance for small business not only aids in
their growth and development but is also an essential means to poverty reduction and social
empowerment. Every job creates economic activity by allocating resources both personal and
material to productive purposes which further leads to creation of growth oriented
opportunities for the society by contributing to the common goods and services. Supporting
micro firms in their economic activities can lead to their expansion and thereby create job
opportunities. Jobs can have a transformational value when they contribute to end objectives
of livelihood opportunities, reducing income inequalities, reducing gender gaps etc.
● Impact on job generation – Improving access of finance to micro entrepreneurs has been
found to have a positive correlation with employment generation. A multiplier effect through
indirect job generated by MUDRA beneficiaries is significant and has helped provide
livelihood avenues for semi-skilled and unskilled people.
● MUDRA’s Multiplier Effect – The MUDRA scheme has been a key instrument for creating
livelihoods and jobs for the lowest socio-economic segments of our society today. It has
enabled them to stand up on their feet and not only empower themselves but also others who
are seeking opportunities to make a living. The employment multiplier for all MUDRA loan
segments is more than 1 which is the minimum employment created per MUDRA loan. 37%
of all beneficiaries in the sample set created new jobs.
● MUDRA is fuelling growth of micro enterprises and informal sector – Addressing the
financial requirements for working capital and expansion such as new machinery,
product/service diversification, manpower, client outreach etc, MUDRA is an effective
solution to the credit starved sector. With maximum beneficiaries i.e. 50% of the sample set in
the Shishu segment, the potential of the scheme to effectively reach out to the small and micro
enterprises is well established. Further, 78% of the beneficiaries used the loan for expanding
their current businesses. The funds have been greatly used for buying new equipments,
diversifying product range and increasing consumer base.
● An alternative to private money lenders – MUDRA yojana is an alternative solution to
those turning to local money lenders lending at usurious rates. Moderate interest rates and
collateral free finance have enabled many to access financial help through these means. The
scheme also places the beneficiaries in direct contact with banks/registered financial
institutions thereby effectively eliminating middlemen.

● Impetus to entrepreneurship – 22% of the beneficiaries used the loan for setting up new
businesses. While a maximum no. of beneficiaries acquired the loan for expansion/working
29
capital of their existing businesses. It is noteworthy that 6% of the respondents were
unemployed and started new business with the loan and another 9% quit their existing jobs
and became self-employed.
● An attractive option to many first-time loan takers – The MUDRA Yojana has also been
successful in attracting many first-time loan takers because factors such as - ease of access,
low interest rates, collateral free and an element of security. In the sample set surveyed, 80%
of the beneficiaries were the ones who took loan for their business for the first time.
● Banks have emerged as the major source of awareness creation among the masses with 49%
of them stating banks as their first source of information. Many branches have taken proactive
initiatives such as holding loan camps, sending representatives in nearby locales to spread
awareness.

6.2 RECOMMENDATIONS:
The scheme has the potential to create a self sustaining environment for the burgeoning
population in working age group. However, there is a need to create a robust mechanism that
effectively addresses the challenges impacting the scheme. For positioning MUDRA not just
as a micro credit scheme for encouraging and supporting growth and development of the
unorganized/micro enterprises/self-employed individuals, we propose certain key action areas
for to add an element of assurance for both the bankers and beneficiaries.
● Mentorship - Hand holding with the new entrepreneurs such as financial advice, business/
trading advice, managing accounts etc is essential to ensure productive use of the loaned
amount and ensure sustainability of the results. A mechanism must be created to aid the
existing micro entrepreneurs for moving up the ladder by extending professional support in
maintaining books of accounts, legal formalities and other paperwork.
● Skill Development – Skill training to the people availing the loans would help to maximize
the impact of the scheme along with making it more viable at the end of the beneficiary.
● Institutionalizing a Convergence Platform - To ensure a more rational disbursal of loans,
a platform may be created to link MUDRA with skill development centres. This would ensure
easy availability of credit to skilled personnel and encourage entrepreneurship among the
trained candidates.
● Guidelines for assessing the creditworthiness of individuals - A set of guidelines to
provide a security net for the banks must be enlisted. Since the loans are collateral free, a
proper risk assessment of the every disbursal would impact sustainability of results and
ultimate success of the scheme.
● Prioritizing - The deliverables of the scheme may be redesigned to suit socioeconomically
determined priorities. This would enable targeted approach of the scheme and focused
utilization of the fund. Such assessment must be carried out at all levels.

30
CHAPTER 07
CONCLUSION

31
7. CONCLUSION:
The study concluded that PMMY is a great initiative taken by the GOI. Due to It, there is a
big change in the area of micro finance. The scheme will help the weaker section, low-income
group and unfunded population and also will increase the competition. Financial inclusion
through PMMY increases the opportunities for credit requirement and refinance. The
introduction of the national plan PMMY with other type of financial inclusion initiative, yield
a valuable result. The PMMY conspire is certain to take our country forward to the future.
MFIs contributed significantly for the financing women under PMMY. It perceives that
because of dispatch of this plan, monetary consideration has expanded towards positive
heading. So, it can be say that if it is implemented properly, it may work as a game changing
financial inclusion initiative of Government of India and may boost the Indian economy.
Various aspects of Pradhan Mantri Mudra Yojana have been shown and the categories of
Mudra Yojana such as 'Shishu', 'Kishor' and 'Tarun' have been presented in detail. The region
wise performance of Targets vs. Achievements divided into five regions based on their
geography and the distribution of PMMY loans sanctioned during the year has been analyzed
This paper fulfil its purpose shows the performance of top 10 states, where Karnataka ranks
first in loan sanctions. Along with this, bank accounts and Sanction loans have also been shown
under the Mudra scheme in different regions of India. Out of the total amount sanctioned, 41%
went to the women borrowers. 66% of the accounts in Shishu category belonged to women
who were sanctioned 69% of the amount in the Shishu category. The reason for high share of
women in Shishu category is lending of micro-loans by the MFIs primarily to women. The
total target for the financial year 2020-2021 was Target Rs. 3.50 lakh crore, the sanction
amount 3,21,759 with growth rate of (5%).

32
The conclusion of the Mudra scheme, which stands for Micro Units Development and
Refinance Agency, depends on various perspectives. Introduced in 2015 by the Indian
government, the scheme aimed to provide financial assistance to micro-enterprises,
particularly those owned by women and marginalized communities, to foster entrepreneurship
and job creation.
Here are some aspects to consider in evaluating the scheme's conclusion:
1. Financial Inclusion: The Mudra scheme significantly contributed to financial inclusion by
providing loans to small businesses and entrepreneurs who may not have had access to formal
banking channels previously. This aspect has helped in reducing the dependency on informal
sources of credit, which often come with high-interest rates.
2. Entrepreneurship Development: The scheme has played a crucial role in promoting
entrepreneurship by providing capital to micro-enterprises. This has empowered individuals
to start their businesses, thereby creating employment opportunities and contributing to
economic growth.
3. Loan Disbursement: Over the years, the scheme has disbursed a significant amount of
loans to micro-enterprises across various sectors. The scale of disbursement reflects the
government's commitment to supporting small businesses and encouraging self-employment.
4. Challenges and Criticisms: Despite its positive impact, the Mudra scheme has faced
criticism regarding the effectiveness of loan utilization, potential risks of loan defaults, and
concerns about the quality of jobs created. Some critics argue that a large portion of the loans
disbursed under the scheme might have gone to non-productive or unviable ventures, leading
to a rise in non-performing assets (NPAs).
5. Sustainability: The long-term sustainability of the Mudra scheme depends on its ability to
ensure the repayment of loans and the continued growth and success of the supported micro-
enterprises. Monitoring and support mechanisms are crucial in this regard to mitigate the risks
associated with loan defaults and to promote the viability of the businesses.
6. Future Prospects: Moving forward, the government needs to address the challenges and
criticisms while also building upon the successes of the Mudra scheme. This may involve
refining the targeting criteria, enhancing financial literacy among beneficiaries, strengthening
monitoring mechanisms, and fostering an ecosystem conducive to the growth of micro-
enterprises.

In conclusion, the Mudra scheme has been instrumental in promoting financial inclusion and
entrepreneurship in India. However, its long-term success will depend on addressing
challenges, ensuring loan repayment, and fostering sustainable growth in the micro-enterprise
sector.
33
REFERENCE

34
REFERENCES:

➢ Annual Report 2022-23.

➢ Agarwal, M., & Dwivedi, R. (2017). Pradhan Mantri MUDRA Yojna: A Critical
Review.
➢ Parikalpana: KIIT Journal of Management, 97-106.
➢ Chowdappa, C. B., Shruthi, S. K., Chandana, A. S., & Sushma, M. (2017).
➢ Role of MUDRA on Promoting Sustainable Development in MSME.
➢ Shanlax International Journal of Commerce, 5 (3), 76-81.
➢ George, B., & Nalini, J. (2018). Role of MUDRA Bank in the Growth of MSMEs.
➢ International Journal of Business and Management Invention, 7 (2), 59-62.
➢ Godha, A., & Nama, D. (2017). Pradhan Mantri MUDRA Yojana: A New Financial
Inclusion Initiative. International Journal of Engineering Technology, Management and
Applied Sciences, 5 (3), 200- 204.
➢ Gupta, S. (2015). MUDRA: Financial inclusion of the missing middle. Indian Journal
of Applied Research,5 (11),277-279.
➢ Gupta, S. K., Matho, K. N., & Dubey, N. D. (2017). Role of MUDRA Yojana in
Promotion of Financial Inclusion in Jharkhand. International Journal of Trend in
Scientific Research and Development, 1 (6).
➢ Jindal, M. K., & Bhardwaj, A. (2016). Entrepreneurship Development in India: A New
Paradigm.
➢ Proceedings of the World Congress on Engineering, II, London, UK. Kavita, P. &Baag,
P. K. (2016).
➢ Banks in India-Technical and Scale Efficiency in Financing Entrepreneurs and Small
Businesses: DEA Approach (Working Paper No. IIMK/WPS/206/FIN/2016/18), Indian
Institute of Management Kozhikode.
➢ Mahajan, A. (2018). An Analysis of Performance and Impact of MUDRA Yojna under
PMMY in the year 2016.
➢ Research Journal of Management Science, 7 (3), 1-5. Rajeev, &Dhirender (2017).
Impact of MUDRA loan scheme on micro & small printing units.
➢ International Journal of Engineering Sciences & Research Technology, 6 (7), 687-691.
Roy, A. K. (2016).
➢ Mudra Yojana-A strategic tool for small business financing. International Journal of
Enhanced Research in Management & Computer Applications, 4(1), 68-72. Shahid, M.,
& Irshad, M. (2016).
➢ A Descriptive Study on Pradhan Mantri MUDRA Yojana (PMMY). International
Journal of Latest Trends in Engineering and Technology, 121-125.
35
➢ Shiny, V. N. (2017). Micro Enterprises and MUDRA Banks in India. International
Journal of Research in Economics and Social Science, 7 (10), 655-665.
➢ Soni, A. (2016). MUDRA: Micro Units Development and Refinance Agency. EPRA
International Journal of Economic and Business Review, 4 (9)
➢ Micro Enterprises and MUDRA Banks in India. International Journal of Research in
Economics and Social Science, 7 (10), 655-665.

THANK YOU

36
4/23/24, 1:45 PM “PRADHAN MANTRI MUDRA YOJANA (PMMY): CRITICAL REVIEW”

“PRADHAN MANTRI MUDRA YOJANA

(PMMY): CRITICAL REVIEW”
जानकारी शोध के लिए एकत्र की जा रही है और पूर्णतया गोपनीय रखी जाएगी। इससे संबंधित किसी भी प्रश्न
के लिए आप मुझसे संपर्क कर सकते हैं। धन्यवाद।

* Indicates required question

1. Name *

2. Age *

3. Gender *

Mark only one oval.

Male

Female

Other

4. Under which category did you belong? *

Mark only one oval.

General

OBC

SC

ST

OTHER

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5. Are you aware of the MUDRA scheme (Micro Units Development & Refinance
Agency Bank)?

Mark only one oval.

Yes

No

Maybe

6. Have you ever applied for a Loan Under MUDRA scheme?

Mark only one oval.

Yes

No

7. How did you get to know about the MUDRA scheme?

Mark only one oval.

Newspaper

T.V

Radio

Friends and Family

Online

Other

8. What was the amount of the MUDRA loan you had applied for?

Mark only one oval.

Under 20,000

50,000 To 1,00,000

1,00,000 To 5,00,000

5,00,000 To 10,00,000

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9. Do you think, a centralized & digital MUDRA application process would ensure
better financing of funds?

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Yes

No

Maybe

10. What is the maximum loan amount available under PMMY?

Mark only one oval.

1,00,000

5,00,000

8,00,000

10,00,000

11. Who can avail the PMMY loan?

Mark only one oval.

Public Banks, Private Banks, RRBs and Other Banks

Directly from MUDRA

Citizens

All of the above

12. MUDRA has been set up by whom?

Mark only one oval.

Government of India

RBI

SBI

SEBI

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13. MUDRA Card is a debit card on which payment platform?

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RuPay

Visa

Master Card

Other

14. Is MUDRA scheme good for Indian Citizens?

Mark only one oval.

Yes

No

Maybe

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“PRADHAN MANTRI MUDRA YOJANA

(PMMY): CRITICAL REVIEW”
64 responses

Publish analytics

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Age Copy
64 responses

8
8 (12.5%)
6 (9.4%)
6

4 (6.3%)
4 (6.3%) 4 (6.3%)
4 3 (4.7%) 3 (4.7%)
2 (3.1%)
2 (3.1%) 2 (3.1%) 2 (3.1%) 2 (3.1%)
2 (3.1%)
2 (3.1%)
2 (3.1%)
2 1 (1.6%)
1 (1.6%)
1 (1.6%)
1 (1.6%)
1 (1.6%)
1 (1.6%)
1 (1.6%)
1 (1.6%)
1 (1.6%)
1 (1.6%)
1 (1.6%)
1 (1.6%) 1 (1.6%)
1 (1.6%)
1 (1.6%)
1 (1.6%

0
18 22 26 30 35 42 50 55 58 62 75

Gender Copy
64 responses

Male
42.2% Female
Other

57.8%

Under which category did you belong? Copy

64 responses

General
45.3% OBC
SC
ST
OTHER

46.9%

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Are you aware of the MUDRA scheme (Micro Units Development & Copy
Refinance Agency Bank)?
64 responses

Yes
No
Maybe

95.3%

Have you ever applied for a Loan Under MUDRA scheme? Copy
64 responses

Yes
56.3% No

43.8%

How did you get to know about the MUDRA scheme? Copy
64 responses

Newspaper
28.1% T.V
Radio
Friends and Family
10.9%
17.2% Online
Other
15.6%
12.5%

15.6%

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What was the amount of the MUDRA loan you had applied for? Copy
47 responses

Under 20,000
50,000 To 1,00,000
36.2%
1,00,000 To 5,00,000
5,00,000 To 10,00,000

40.4% 10.6%

12.8%

Do you think, a centralized & digital MUDRA application process would Copy
ensure better financing of funds?
64 responses

Yes
No
Maybe
14.1%

84.4%

What is the maximum loan amount available under PMMY? Copy

64 responses

1,00,000
43.8% 5,00,000
8,00,000
10,00,000

10.9%
28.1%

17.2%

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Who can avail the PMMY loan? Copy

64 responses

Public Banks, Private Banks,

RRBs and Other Banks
Directly from MUDRA
17.2% Citizens
All of the above
67.2%

9.4%

MUDRA has been set up by whom? Copy

64 responses

Government of India
RBI

20.3% SBI
SEBI

78.1%

MUDRA Card is a debit card on which payment platform? Copy

64 responses

RuPay
9.4% Visa
Master Card
14.1% Other

71.9%

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Is MUDRA scheme good for Indian Citizens? Copy

64 responses

Yes
No
Maybe

10.9%

87.5%

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