Mudra Loan Disbursement Among Different Social Groups

Abstract

Indian banking and financial system work as a catalyst to this growth trajectory. To strengthen the micro business segment, a feather has been added under the aegis of GOI in the year 2015 to the formal lending system in the form of MUDRA. It has been a milepost accomplishment in the financial inclusion panorama. Through this system, the endeavour is to bring all the sectors into mainstream and to make financial services available to all the sectors. MUDRA provides different categories and sub-categories of formal loans at a low rate of interest according to the needs and requirements of startups and other micro enterprise units. MUDRA loans have been instrumental in providing financial support to individuals from various social groups, promoting inclusivity and empowerment. It addresses the lack of access to formal credit for individuals from different social groups, who often face difficulties in obtaining loans from traditional banking institutions due to various reasons such as lack of collateral, low income, or limited credit history. It offers customized loan products designed to cater to the specific needs and requirements of small and micro enterprises. MUDRA Credit is accompanied by various support mechanisms such as capacity building, skill development, and business mentoring. These initiatives help borrowers enhance their entrepreneurial skills, manage their businesses effectively, and improve their chances of success. It is important to note that MUDRA loans are not limited to any specific social group. They are available to individuals from all social groups who meet the eligibility criteria. The loans have been designed to cater to the diverse needs and aspirations of entrepreneurs across different social backgrounds, facilitating their access to formal credit and promoting entrepreneurship at the grassroots level. The present study utilizes the secondary data including government reports, surveys, and scholarly articles, and case studies, to provide an in-depth understanding of the sub-categories within the Mudra Yojana framework to assess the effectiveness and inclusivity of the Mudra Yojana in reaching marginalized communities. The study period is six years from 2016-17 to 2021-22. The Shishu category recorded the highest number of accounts i.e., 26,70,67,119 along with highest loan disbursement of Rs. 7,31,706.97 among all the categories. The study shows continuous growth among all the sub-categories (except in OBC in Shishu Loans) in all the Mudra Loans Schemes.