Credit and Finance for MSMEs: The annual number of loans sanctioned under Prime Minister Narendra Modi’s Pradhan Mantri Mudra Yojana (PMMY) scheme to promote entrepreneurship and self-employment has dropped for the first time since the launch of the scheme in 2015. The number of sanctioned loans had grown from 3.4 crores in FY16 to 6.2 crores in FY20 before it dropped to 4.3 crores as of March 26, 2021, in the recently concluded FY21, according to the government data on the Mudra scheme. Consequently, the amount sanctioned also declined from Rs 3.37 lakh crore in FY20 to Rs 2.79 lakh crore in FY21.
“There was almost no business activity in the initial three-four months of the previous financial year because of the lockdown. Even after that, people didn’t want to start their new business amid the prevailing uncertainty in the ecosystem. Despite that, the number of loans sanctioned remains significant and the dip is very marginal due to Covid and lockdown,” Mukesh Mohan Gupta, President, Chamber of Indian Micro, Small & Medium Enterprises (CIMSME) told Financial Express Online.
The amount disbursed had dropped from Rs 3.29 lakh in FY20 to Rs 2.64 lakh as of March 26, 2021. Launched on April 8, 2015, PMMY offered up to Rs 50,000 loan under the Shishu cover, Rs 50,000 – 5 lakh loan under the Kishor cover, and Rs 5 lakh – Rs 10 lakh under the Tarun cover to non-corporate, non-farm MSEs. “Banks too have been keen to lend but due to the subdued activity, entrepreneurs had pulled themselves back from taking much loans. However, we expect growth to resume if the pandemic doesn’t rage,” added Gupta. CIMSME represents around 6,000 MSME members across India.
Over 28.68 crore loans for an amount of Rs 14.96 lakh crore were sanctioned as of March 19, 2021, since the launch of the scheme, according to a release by the Ministry of Finance on Wednesday. 88 per cent loans were Shishu category while nearly 24 per cent loans were given to new entrepreneurs and around 68 per cent loans had women beneficiaries. Moreover, around 51 per cent loans were given to SC/ST/OBC entrepreneurs. Citing a survey by the Ministry of Labour and Employment, Finance Ministry said that PMMY has helped in 1.12 crore jobs creation from 2015 to 2018 of which women accounted for 69 lakh or 62 per cent of new jobs.
Meanwhile, gross bank credit deployed to micro and small enterprises (MSEs) in December 2020 had jumped 6.6 per cent to Rs 11.31 lakh crore from Rs 10.61 lakh crore during the year-ago period. The December year-on-year (YoY) credit growth to MSEs was also up from 6.1 per cent YoY growth in November 2020, according to the data from the Reserve Bank of India (RBI). MSME sector had a share of around 18 per cent in the total credit to the industry in November 2020, as per RBI data.