Tag: Mudra

Mudra loan disbursals rise in H1 on economic revival, BFSI News, ET BFSI

Personal Finance

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As the economy revives, Mudra loans, or small-ticket loans up to Rs 10 lakh for entrepreneurs and small businesses, have made a comeback.

According to the latest data, Rs 1,17,332 crore has been disbursed as on October 15 in the current fiscal, as against Rs 85,000 crore, showing the trend of normalisation of the economy.

Total disbursals in 2020-21 had declined to Rs 3.11 lakh crore against Rs 3.29 lakh crore in the previous year.

While public sector banks are actively lending to small businesses, many private sector banks are cautious on the segment and lending, just to meet the priority sector norms.

Rise in NPAs

However, non-performing assets among such loans have also increased. In Maharashtra, public sector banks’ Mudra loan NPAs have risen to 32 per cent at June-end 2021, from 26 per cent a year ago.

SBI’s NPA on Mudra loans in the state is at 59 per cent as on June-end 2021, followed by Punjab National Bank at 44 per cent, Indian Bank at 33 per cent and Bank of Maharashtra at 31 per cent at June-end 2021.

In Jharkhand, Canara Bank’s Mudra NPAs are as high as 114.35 per cent and bad loans were Rs 183.63 crore, against the outstanding amount of loans at Rs 160.58 crore.

Among private sector banks, HDFC Bank’s Mudra loan NPAs in Jharkhand were at 26.21 per cent, followed by IDFC First Bank at 24.93 per cent.

Loan losses

Public sector banks have seen a sharp surge in the amount of Mudra loans turning into NPAs over the last three years. NPAs in Mudra loans had jumped to Rs 18,835 crore in 2019-20, from Rs 11,483 crore in 2018-19 and Rs 7,277 in 2017-18, according to finance ministry data.

Mudra loan disbursements by state-owned banks rose to Rs 3.82 lakh crore in 2019-20, from Rs 3.05 lakh crore in 2018-19 and Rs 2.12 lakh crore in 2017-18.

Banks and financial institutions have sanctioned Rs 14.96 lakh crore to over 28.68 crore beneficiaries in the last six years. The average ticket size of the loans is about Rs 52,000, it said.

Under Pradhan Mantri MUDRA Yojana, collateral-free loans of up to Rs 10 lakh are extended by Member Lending Institutions (MLIs) viz Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) etc.



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Defying Covid wave, disbursal of Mudra loans grows in Q1

Banking & Finance

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Notwithstanding the severe second wave of Covid-19, disbursal of petty business loans under Pradhan Mantri Mudra Yojana (PMMY) has picked up in the first quarter of the current financial year compared to the same period last year.

As on July 2, loans worth ₹37,601 crore have been disbursed against a total sanctioned amount of ₹41,516 crore, according to data available with Mudra.

“The disbursals in the first quarter of FY22 were higher by about ₹4,000 crore compared to the first quarter of FY,’’ a senior official of Mudra told BusinessLine.

“Though the second wave of the pandemic in the first quarter was more severe than last year, the lockdowns were scattered in different States and there was no national lockdown. Even bank employees braved Covid and continued to work. All this drove growth in disbursal of Mudra loans,’’ a senior official of State Bank of India told BusinessLine.

Three categories

Mudra loans are extended in three categories – Shishu (up to ₹50,000), Kishor (above ₹50,000 and up to ₹5 lakh) and Tarun (above ₹5 lakh and up to ₹10 lakh).

Among the three categories, Shishu loans have a lion’s share in the total loans at about 48 per cent.

Bankers expect the growth in PMMY loans to gain pace further in the remaining quarters with the second wave of covid coming under control now.

Last financial year was challenging for the small business loans. The loans dropped to ₹2,79,481 crore from ₹3,37,495 crore in the financial year 2019-20.

However, there is no complete data on the state of non-performing assets (NPAs) in the segment and among banks.

Mudra loans are given by commercial banks, regional rural banks, small finance banks, MFI and NBFCs. The public sector banks, however, have been the main channel and account for over 60 per cent of the loans disbursed.

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PSBs may face more stress at govt focuses on Mudra loans, BFSI News, ET BFSI

Banking & Finance

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The government is banking on small borrowers to help lift credit demand and has asked banks to lenders to focus on Mudra loans.

It expects small borrowers to help pick up credit demand once the lockdowns in states are eased.

The government has asked banks to prioritise this segment and ensure timely sanctions and disbursals. Lenders have also been asked to regularly monitor asset quality for small-ticket loans including PMMY loans.

Loans disbursed by banks and microfinance institutions for non-corporate small borrowers and for income-generating activities in the non-farm segment are termed as Mudra loans under the Pradhan Mantri Mudra Yojana (PMMY), which was launched in 2015,

In fiscal 2021, banks had sanctioned loans worth Rs 2.79 lakh crore under the PMMY. Of these, loans of Rs 2.64 lakh crore were disbursed.

Interest subvention

The government is also considering extending the interest subvention of 2% on prompt repayment of Shishu loans sanctioned under the Pradhan Mantri Mudra Yojana (PMMY).

Under the PMMY, loans up to Rs 50,000 are termed Shishu loans. The subvention scheme is being implemented through the Small Industries Development Bank of India.

Last year in June, the government announced the interest subvention under the Atmanirbhar Bharat Abhiyan. It had noted that the move will help support small businesses to continue functioning during these times of crisis and have a positive impact on the economy and support its revival.

Loan losses

However, public sector banks (PSBs) have seen a sharp surge in the amount of Mudra loans turning into non-performing assets (NPAs) over the last three years. NPAs in Mudra loans had jumped to Rs 18,835 crore in 2019-20, from Rs 11,483 crore in 2018-19 and Rs 7,277 in 2017-18, according to the Finance Ministry data.

Mudra loan disbursements by state-owned banks rose to Rs 3.82 lakh crore in 2019-20, from Rs 3.05 lakh crore in 2018-19 and Rs 2.12 lakh crore in 2017-18. The Mudra loan NPAs as a percentage of total loans rose to 4.92 per cent in 2019-20 from 3.42 per cent in 2017-18.

Banks and financial institutions have sanctioned Rs 14.96 lakh crore to over 28.68 crore beneficiaries in the last six years. The average ticket size of the loans is about Rs 52,000, it said.

Under PMMY collateral-free loans of up to ₹10 Lakh are extended by Member Lending Institutions (MLIs) viz Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) etc.

The loans are given for income generating activities in manufacturing, trading and services sectors and for activities allied to agriculture.



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