The Pradhan Mantri Mudra Yojana (Mudra) was launched in 2015 to provide collateral-free micro loans to micro enterprises/units involved in manufacturing, trading and services sectors, including allied agricultural activities, subject to a maximum limit of Rs 1,000,000. Under Mudra, there are three categories of loans: ‘Shishu’, ‘Kishor’ and ‘Tarun’ signifying the funding needs of the micro enterprise: Shishu (Upto Rs 50,000), Kishor (Rs 50,001 to Rs 500,000), Tarun (Rs 500,001 to Rs 1,000,000).
According to JM Finanical, since its launch in April 2015, Rs 6.5 lakh crore has been disbursed under the scheme, with majority of disbursements coming under ‘Shishu’ loans, followed by ‘Kishor’ and ‘Tarun’ loans.
For smooth functioning, achieve credit growth and ensure maximum benefits for the borrowers, the government use to set annual targets of disbursement under the scheme and the current target for FY19 is Rs 3 lakh crore.
Significantly, Mudra has mostly managed to achieve the given targets since inception in FY16 (barring FY17, where it achieved 97 per cent target). Specifically, PSU banks are handed out bank-wise targets. The average ticket size of Mudra loans stood at Rs 50,000 (based on 1HFY19 disbursements) on account of higher disbursements in lower-ticket-sized ‘Shishu’ loans (89 per cent of number of loans disbursed).
The average ticket size for some states such as AP, Telangana, Punjab, Rajasthan, Gujarat and Maharashtra, is higher than the overall average, given the larger proportion of ‘Kishor’ and ‘Tarun’ loans. Ticket sizes are understandably higher in some of the western and southern states, which also correspond with their comparatively higher per-capita income levels. These states also have a relatively higher mix of ‘Kishor’ and ‘Tarun’ loans. The popularity of Mudra loans has been on a rise as is evident from the increasing amount of loan disbursements. However, the disbursements remain concentrated in a few states. In FY18, top 10 states accounted for 72 per cent of the total disbursements.
The PSU banks have the largest share (39 per cent) in overall loan disbursements by amount. Further, the share of micro-finance institutions (MFIs) and private sector banks are at 24 per cent and 22 per cent respectively.
The MFIs largely operate in the lower ticket size ‘Shishu’ loans segment and hence, their average ticket size is low at Rs 21,000. Since MFIs account for a majority (51 per cent) of disbursements (by number), the overall ATS of loans is comparatively low at Rs 44,000 (FY17).
However, the ATS of disbursements made by PSU and select private banks is well above this level.