MSME Credit · Mudra

Micro and small enterprises employ crores of Indians but were long shut out of formal credit, dependent on moneylenders. The Pradhan Mantri Mudra Yojana (PMMY), launched in 2015, changed that by offering collateral-free loans through banks and NBFCs. Since inception, over 52 crore loans worth roughly ₹40 lakh crore have been sanctioned across the Shishu, Kishore and Tarun categories.

Around two-thirds of Mudra loans by value went to women, and nearly half of beneficiaries came from SC, ST and OBC communities, making it a major tool for inclusive entrepreneurship. In 2024 a new Tarun Plus category raised the ceiling to ₹20 lakh for borrowers who had repaid earlier loans, helping small firms grow beyond micro scale.

MSMEs — the small workshops, shops and firms that employ the most Indians — often can't get bank loans because they lack collateral. PM MUDRA Yojana cracks this by offering collateral-free loans in three tiers (Shishu, Kishore, Tarun) through banks, with the government guaranteeing part of the risk. Alongside, a simple Udyam online registration formalises small firms, unlocking priority-sector credit, government tenders and other benefits.

MUDRA has sanctioned over ₹30 lakh crore across roughly 50 crore loans since 2015, and the top loan limit was doubled to ₹20 lakh in 2024 — a huge push of credit to the smallest businesses. The next step is helping micro-borrowers grow rather than just survive: better handholding, digital and formal credit histories, moving firms up from tiny to small to medium, and keeping bad loans in check as lending scales.

The next step is helping micro-borrowers grow — most Mudra loans are tiny 'Shishu' loans, so the task is graduating them into larger, job-creating firms while keeping loan quality healthy.

~₹40 lakh crore sanctioned; 52 crore+ loans (since 2015). ~66% by value to women; ~half to SC/ST/OBC. Ceiling raised to ₹20 lakh (Tarun Plus). Sources: Ministry of Finance, PMMY.