Relevance: GS III (Inclusive Growth & Economy) & GS II (Government Policies) | Source: Ministry of Finance / PIB

1. The Context: What is the latest milestone?

The Pradhan Mantri MUDRA Yojana (PMMY) has successfully completed 11 years since its launch in April 2015.

• The Core Vision: The scheme operates on a simple but powerful idea: “Funding the Unfunded.” It aims to provide formal bank loans to small business owners (like local shopkeepers, artisans, and vendors) who historically had to borrow from local moneylenders at very high interest rates.
• The Achievement: In the last 11 years, the scheme has sanctioned over 57 crore loans. This has directly empowered millions of ordinary citizens to become “job creators” instead of just “job seekers.”

2. Administrative Structure: How does it work?

It is highly important to understand the official mechanism of this scheme:

• The Refinancing Model: MUDRA is not a direct bank. You cannot walk into a “MUDRA Bank” to open an account. It acts as a Refinancing Agency.
• Member Lending Institutions (MLIs): MUDRA provides funds to regular banks (like SBI, PNB), Regional Rural Banks, and Microfinance companies. These local banks (called MLIs) are the ones that give the actual loans to the public.
• Who is Eligible? The loans are strictly for non-corporate, small businesses.
  • Important Exception: While core farming (agriculture) is excluded, allied agricultural activities (like dairy, poultry, beekeeping, and fisheries) are fully eligible to get MUDRA loans.

3. The Four Loan Categories

To support businesses at different stages of their journey, the government has categorized the loans into four slabs. (Note: A new fourth category was recently added).

• 1. Shishu (Up to ₹50,000): For ordinary individuals who are just starting a brand-new small business.
• 2. Kishor (₹50,001 to ₹5 Lakh): For existing small businesses that need funds for initial expansion.
• 3. Tarun (₹5 Lakh to ₹10 Lakh): For established businesses looking to scale up their production or operations.
• 4. Tarun Plus (₹10 Lakh to ₹20 Lakh): A newly added category. It is exclusively for successful entrepreneurs who have a track record of repaying their previous Tarun loans on time.

4. Impact on Social Justice and Equity

The administration uses MUDRA as a powerful tool for social upliftment:

• Feminization of Credit: Nearly 60% of all MUDRA loans have been given to women entrepreneurs. This has massively boosted female financial independence in rural India.
• Supporting the Marginalized: Over 45% of the total loans have gone to citizens belonging to the SC, ST, and OBC categories, ensuring that economic growth reaches the most vulnerable sections.

UPSC Value Box

With reference to the Pradhan Mantri MUDRA Yojana (PMMY), consider the following statements:

1. MUDRA functions as a direct lending institution that provides credit to micro-enterprises through its own dedicated branches across India.
2. Under the scheme, loans are classified into four categories—Shishu, Kishor, Tarun, and Tarun Plus—based on the stage of growth of the enterprise.
3. While core agricultural activities are excluded, allied activities such as poultry, dairy, and pisciculture are eligible for credit under the scheme.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Correct Answer: (b)