- Why in news
- On 8 April 2026, PIB marked 11 years of the Pradhan Mantri MUDRA Yojana, reporting ₹40.07 lakh crore disbursed across 57 crore+ loan accounts as of 27 March 2026.
- What it is
- PMMY was launched on 8 April 2015 to give collateral-free institutional credit to non-corporate, non-farm micro and small enterprises. MUDRA Ltd. does not lend directly. It refinances banks, NBFCs and MFIs, which lend to borrowers. Loans are grouped by size into Shishu, Kishor, Tarun and Tarun Plus.
- Tarun Plus
- Newest category, started in 2024. It is for borrowers who repaid earlier Tarun loans and have a stable business record.
- Three-tier structure
- MUDRA Ltd., Member Lending Institutions (SCBs, RRBs, SFBs, NBFCs, MFIs) and borrowers. MUDRA gives refinance support.
- Credit guarantee
- CGFMU, run by NCGTC, guarantees PMMY loans and lowers lenders' credit risk.
- Lenders
- Loans are given by Member Lending Institutions: scheduled commercial banks, NBFCs and MFIs.
- Loan categories
- Shishu up to Rs 50,000; Kishor above Rs 50,000 to Rs 5 lakh; Tarun above Rs 5 lakh to Rs 10 lakh; Tarun Plus above Rs 10 lakh to Rs 20 lakh.
- Tarun Plus eligibility
- Only borrowers who earlier took and repaid a Tarun loan can get Tarun Plus, introduced in 2024-25.
- Jan Samarth portal
- Jan Samarth hosts 15 credit-linked schemes with self or assisted application journeys.
- MUDRA Ltd role
- MUDRA Ltd. refinances lenders and does not lend directly to borrowers.
Don’t confuse with MUDRA Ltd. vs lending institutions: MUDRA Ltd. refinances. Banks, NBFCs and MFIs are the ones that lend to borrowers.
Don’t confuse with CGFMU vs PMMY: PMMY is the lending scheme. CGFMU is a separate guarantee fund that backs its loans.
Don’t confuse with PMMY vs Stand-Up India: PMMY gives loans up to Rs 20 lakh to non-farm micro enterprises. Stand-Up India gives Rs 10 lakh to Rs 1 crore loans to SC/ST and women first-time entrepreneurs.
Schemes: 52 Prelims questions since 2013, 10 in Prelims 2026 alone. They test features, the period and who funds it. In Mains, 33 news-triggered questions, mostly GS3.
Why it matters
- Gives collateral-free formal credit to micro units that relied on moneylenders, deepening financial inclusion.
- Reaches women (about 60% of accounts) and new entrepreneurs, supporting self-employment.
- Collateral-free credit helps women and small traders who lack collateral or credit history.
- Supports self-employment in manufacturing, trading and services.
Problems
- Credit quality: the release itself lists improving credit quality as a priority, which points to stress risk in small unsecured loans.
- Many loans are very small, so enterprise growth and sustainability are not assured.
- Rising NPAs and risk of loan evergreening in small loans.
- Most loans are small Shishu loans, which may not build scalable enterprises.
Way forward
- Shift toward growth-oriented financing and graduate borrowers to higher loan tiers.
- Use digital integration such as the JanSamarth portal and credit guarantees to cut lender risk and delays.
- Strengthen credit appraisal and monitoring, with data-based tracking of repayments.
- Use portals like Jan Samarth to speed up applications and track disbursal.
Put in your answer
Scale of PMMY: 57 crore+ loan accounts and ₹40.07 lakh crore disbursed by 27 March 2026.
Inclusion data FY 2024-25: Women took 59.81% of accounts but 37.45% of the amount disbursed.
Social groups: SC, ST and OBC together had 45.52% of accounts and 31.77% of the amount disbursed.
Women beneficiaries: Women who lack collateral or credit history have benefited from collateral-free PMMY loans.
- 2020Mains GS2 · Q17Evaluate SHGs' role in microfinance for asset creation, income security, women's empowerment
- 2016Mains GS3 · Q3Is PMJDY necessary to bring unbanked poor into institutional finance? Justify
- 2013Mains GS2 · Q11Discuss legitimacy and accountability of SHGs and microfinance outfits
- 2023Mains GS3 · Q1Comment on government policies for manufacturing and MSME share in GDP growth.
- 2016Prelims Q73What is the aim of the Pradhan Mantri MUDRA Yojana?
- 2026Prelims Q93Which statements about M1xchange's MSME financing role are correct?
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Single answer
Ours, not from a UPSC paper
Consider the following statements about the Pradhan Mantri MUDRA Yojana (PMMY): 1. MUDRA Ltd. gives refinance support to lending institutions, which lend directly to borrowers. 2. Tarun Plus loans, above ₹10 lakh and up to ₹20 lakh, have been part of the scheme since its launch in 2015. 3. The Credit Guarantee Fund for Micro Units, which covers PMMY loans, is administered by SIDBI. 4. Non-corporate, non-farm micro and small enterprises are the borrowers, and allied activities such as dairy and poultry are covered.
Which of the statements given above are correct?
True or false?
1 of 12
Statements the way Prelims prints them. Say first, then see the fact.
1.Under PMMY, MUDRA Ltd. provides refinance support to lending institutions rather than lending directly to most borrowers.
True. MUDRA is a refinance agency; Member Lending Institutions lend directly.
2.Loans under the Kishor category of PMMY are those above ₹50,000 and up to ₹5 lakh.
True. Kishor: above ₹50,000 up to ₹5 lakh.
3.Non-Banking Financial Companies and Micro Finance Institutions are eligible to lend under PMMY as Member Lending Institutions.
True. MLIs include SCBs, RRBs, SFBs, NBFCs and MFIs.
4.The Credit Guarantee Fund for Micro Units, which covers PMMY loans, is administered by SIDBI.
False. CGFMU is administered by the National Credit Guarantee Trustee Company (NCGTC).
5.PMMY loans are meant for non-corporate, non-farm micro and small enterprises, including allied agricultural activities such as dairy and poultry.
True. Borrowers are non-corporate, non-farm enterprises; allied activities such as poultry and dairy are covered.
6.Under PMMY, collateral-free loans up to Rs 20 lakh can be extended to eligible borrowers.
True. The ceiling is Rs 20 lakh, collateral free.
7.Only scheduled commercial banks can act as Member Lending Institutions under PMMY.
False. NBFCs and MFIs are also MLIs.
8.Kishor loans cover amounts above Rs 50,000 and up to Rs 5 lakh.
True. Kishor: above Rs 50,000 to Rs 5 lakh.
9.Tarun loans cover amounts above Rs 5 lakh and up to Rs 20 lakh.
False. Tarun goes only up to Rs 10 lakh; Rs 10-20 lakh is Tarun Plus.
10.Tarun Plus is open to any applicant, including first-time borrowers.
False. Only those who took and successfully repaid a Tarun loan are eligible.
11.PMMY loans can be used for activities allied to agriculture as well as manufacturing, trading and services.
True. Eligible sectors include manufacturing, trading, services and agriculture-allied activities.
12.MUDRA Ltd. lends directly to borrowers under PMMY.
False. It refinances banks, NBFCs and MFIs, which lend to borrowers.
Written by us from the release, not by UPSC; checked by a second model.
Mains practice
15 marks · 250 words
The Pradhan Mantri MUDRA Yojana completed 11 years in April 2026, with ₹40.07 lakh crore disbursed across more than 57 crore loan accounts. Examine the provisions of the scheme and discuss its significance for financial inclusion and micro-enterprise growth. Also assess the challenges in ensuring credit quality and enterprise sustainability.
Worth revising until Prelims 2027: most news questions come within two years of the event.