Till last month, speculation was rife that lending institutions would have to work overtime to meet the government’s Mudra loan lending target of Rs 3 lakh crore set for the last fiscal or risk a hat-trick. After all, according to the official website, the amount of Pradhan Mantri Mudra Yojana (PPMY) loans sanctioned till March 22 stood at Rs 2.82 lakh crore, of which nearly 97% had been disbursed.
But in the last eight days of the previous fiscal, loans worth around Rs 18,000 crore were sanctioned under the Modi government’s flagship scheme to ensure that the target was met for the third year running, the Financial Express reported. “We have already crossed the [Rs 3 lakh crore] target. In the next week or so we will officially release the data,” a senior official in the department of financial services told the daily.
This translates to Mudra loans worth Rs 4,500 crore being sanctioned daily over the last four working days in March. In comparison, the average rate of sanction of Mudra loans reportedly stood at Rs 970 crore per working day for the whole financial year, the daily added.
The scheme, launched on April 8, 2015, offers loans up to Rs 10 lakh for non-agricultural activities although activities allied to agriculture, such as dairy, poultry, bee keeping, and the like are covered. Mudra loans are classified into three categories depending on the beneficiary unit’s growth stage and funding needs. While ‘Shishu’ covers loans up to Rs 50,000, the Kishore category covers loans above Rs 50,000 and up to Rs 5 lakh, and Tarun for higher loan amounts. These loans are given by Commercial Banks, RRBs, Small Finance Banks, Cooperative Banks, MFIs and Non-Banking Financial Companies.
In 2016-17, the government had set a target of Rs 1.80 lakh crore for the Mudra scheme, and while the total amount of sanctioned loans in that financial year exceeded the target, the disbursed amount had fallen short by nearly Rs 5,000 crore. In the following fiscal, the amount of disbursed loans exceeded the specified target of Rs 2.44 lakh crore by over Rs 2,000 crore. Forthcoming data will reveal whether the government has managed to better this record in FY19, which will be quite a feat given that the target for the year was 23% higher than the FY18 target.
Interestingly, former RBI governor Raghuram Rajan had red-flagged Mudra loans for potential credit risk last September. And in February, the government informed Parliament that loans worth Rs 7,277.31 crore of public sector banks under the Mudra scheme had turned bad at the end of March 2018. In the first nine months of the last fiscal, the figure reportedly swelled to over Rs 14,930 crore.