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In Charts: What Mudra Annual Report Tells Us About India’s Flagship Lending Scheme

Lenders have sanctioned Mudra loans worth Rs 8.93 lakh crore to about 19 crore accounts in the last four years.

Prime Minister Narendra Modi, attends the launch of the Mudra Yojana in New Delhi, on April 8, 2015. (Photographer: Kuni Takahashi/Bloomberg)
Prime Minister Narendra Modi, attends the launch of the Mudra Yojana in New Delhi, on April 8, 2015. (Photographer: Kuni Takahashi/Bloomberg)

The Micro Units Development and Refinance Agency Bank, popularly known as Mudra, put out its annual report this week detailing the performance of the Narendra Modi government’s flagship scheme in 2018-19.

Lending by private and non-bank lenders under the Mudra scheme rose at a faster pace than their public sector peers in the financial year ended March 2019.

Loans sanctioned by private banks rose 29 percent year-on-year to Rs 64,037 crore, while those given out by non-bank financial companies rose 75 percent to Rs 47,137 crore, according to the annual report of the Micro Units Development and Refinance Agency, helping them breach the lending target set by the government.

That compares with a 7.3 percent increase in disbursements by public sector banks—Rs 9,455 crore short of the lending target. Loans sanctioned by public lenders account for more than 30 percent of the total loans under the Mudra scheme.

Under the scheme, banks and non-bank lenders can offer small-ticket business loans and refinance them at lower rates. The scheme—launched in 2015—is divided into three categories—loans up to Rs 50,000 are categorised as Shishu; loans between Rs 50,000 and Rs 5 lakh as Kishor; and those between Rs 5 lakh and Rs 10 lakh as Tarun.

In the last four years, according to the report, lenders have sanctioned loans worth Rs 8.93 lakh crore to about 19 crore accounts.

But at the same time lenders have been wary about the asset quality of Mudra loans. The Reserve Bank of India, too, had raised concerns and asked the bankers to monitor such loans closely as unsustainable credit growth in the sector can risk the system.

While the agency didn’t disclose the amount of Mudra loans that had turned bad during the year, it said around Rs 12,241 crore loans provided to corporate borrowers were 30 days past due as of March 2019.

BloombergQuint earlier reported, citing data accessed under the Right to Information Act, that bad loans under the Mudra scheme stood at Rs 17,712 crore as of March 2019 compared with Rs 10,874 crore in 2017-18. That worked out to a bad loan ratio of 6.8 percent.

Category-Wise Performance

Overall, more than one crore new accounts were added during the year. That took the total accounts under the scheme to over 5.98 crore as of March 2019, the agency’s report said.

Of this, around 86 percent belongs to the Shishu or sub-Rs 50,000 category, while Kishor and Tarun loans account for 11 percent and 3 percent, respectively.

The Shishu category received around 44 percent of the total loans sanctioned under the scheme in 2018-19. Kishor and Tarun loan beneficiaries received 32 percent and 23 percent, respectively, the annual report said.

Regional Distribution Of Mudra Loans

Nearly 30 percent of all loans sanctioned went to the beneficiaries in south India. That was followed by east (25 percent), north (23 percent) and west (18 percent). Only 4 percent of the total loans went to Northeast.

Tamil Nadu and Karnataka account for 20 percent of the total loans sanctioned under the scheme during the year. These two, along with West Bengal, Maharashtra and Uttar Pradesh, form nearly 45 percent of the total loans sanctioned.

Demographics Of Beneficiaries

Around 62 percent of the beneficiaries under the scheme are women, while 22 percent are first-time borrowers or those with new loan accounts, the annual report said.

While women borrowers received Rs 1.33 lakh crore, or 44 percent, of the total loans sanctioned during 2018-19, first-time borrowers received Rs 1.06 lakh crore, or 33 percent.

The general category formed 52 percent of all loan accounts and it received 68 percent of all loans sanctioned during the year. Scheduled Caste and Scheduled Tribe borrowers, who formed 22 percent of total loan accounts, received 12 percent of all loans sanctioned in the last financial year.