The Pradhan Mantri Mudra Yojana (PMMY) has completed a remarkable 10-year journey as of April 8, 2025. Launched in 2015 by Prime Minister Narendra Modi, the flagship scheme under MUDRA (Micro Units Development and Refinance Agency) was conceptualised to "Fund the Unfunded" by removing traditional barriers to credit and creating a more inclusive financial ecosystem for India’s micro-entrepreneurs.

Democratising Finance and Fostering Entrepreneurship

The core aim of PMMY is to provide collateral-free institutional credit of up to ₹20 lakhs to non-corporate, non-farm micro and small enterprises. By doing so, it has democratised access to finance for those previously excluded from formal credit systems—especially in rural and semi-urban areas.

As of 2025, the scheme has facilitated the sanctioning of over 52 crore loans amounting to a staggering ₹32.61 lakh crore (US$ 379 billion). Tamil Nadu, Uttar Pradesh, and Karnataka have emerged as leaders in total disbursements.

Loan Sizes Show Growing Confidence

Back in FY16, the average Mudra loan size stood at just ₹38,000. Fast forward to FY25, it has more than doubled to ₹1.02 lakh, reflecting a significant scaling up in business ambition and confidence among borrowers. This shift clearly signals that micro enterprises are evolving into small businesses, with increasing capital needs and market orientation.

Empowering Women Through Financial Inclusion

One of the most lauded successes of the Mudra Yojana is its strong focus on women empowerment. A massive 68% of the beneficiaries under the scheme are women, a testament to the scheme’s role in bridging the gender gap in business ownership.

Between FY16 and FY25, the per woman disbursement under PMMY has witnessed a Compound Annual Growth Rate (CAGR) of 13%, showing growing financial strength and credibility among women entrepreneurs. In both rural and urban sectors, women have been using Mudra loans to establish beauty parlours, tailoring units, food stalls, kirana shops, agri-based businesses, and more.

Inclusive Growth for Marginalised Communities

The scheme has also been instrumental in enabling entrepreneurship among marginalised communities. Approximately 50% of Mudra accounts are held by entrepreneurs from Scheduled Castes (SC), Scheduled Tribes (ST), and Other Backward Classes (OBC). Additionally, 11% of accounts are held by members of minority communities.

This robust participation underscores the inclusive character of PMMY and highlights its potential as a tool for socio-economic upliftment.

Shift from Micro to Small-Scale Enterprises

PMMY loans are broadly classified into three categories:

• Shishu: Loans up to ₹50,000

• Kishor: Loans between ₹50,000 and ₹5 lakh

• Tarun: Loans between ₹5 lakh and ₹20 lakh

Of these, the Kishor category has seen the most dramatic expansion. In FY16, only 5.9% of total loans fell under this category. By FY25, this share has surged to 44.7%, pointing to a steady migration from very small operations to scalable businesses. This transformation is pivotal to realising the dream of an Atmanirbhar Bharat (Self-Reliant India).

Boosting MSME Lending: SBI and National Trends

Data from the State Bank of India (SBI) reveals that lending to Micro, Small, and Medium Enterprises (MSMEs) has seen explosive growth—from ₹8.51 lakh crore in FY14 to ₹27.25 lakh crore in FY24. By the end of FY25, it is expected to cross ₹30 lakh crore, a near fourfold increase in just a decade.

This growth trajectory clearly reflects PMMY’s catalytic role in expanding credit flow and building a robust ecosystem of self-reliant micro businesses.

Global Recognition by the IMF

The International Monetary Fund (IMF) has acknowledged the success of the Mudra Yojana in fostering financial inclusion, job creation, and entrepreneurship in India. The scheme is increasingly viewed as a template for inclusive financing models that can be replicated in other developing nations.

Digital Integration and Simplified Processes

One of the scheme’s silent successes has been its ease of accessibility. By eliminating the need for collateral, streamlining application processes, and embracing digital platforms, PMMY has managed to cut through bureaucratic red tape.

Many Mudra loans are now disbursed via online banking portals, UPI-linked loan apps, and digital MSME support platforms—making it easier than ever for first-time borrowers to avail institutional credit.

Sectoral Distribution of Loans

PMMY has benefitted a wide range of sectors, especially those that lie at the grassroots level:

• Trade: Retail shops, vendors, grocers, bookshops

• Agriculture-related: Dairy, poultry, agri-processing units

• Manufacturing: Food processing, textiles, garments

• Services: Salons, travel agencies, tuition centres

This diversification of beneficiaries has ensured that the scheme’s impact is widespread and deeply rooted across multiple economic sectors.

State-wise Performance

The top-performing states in terms of loan disbursal volume have been:

• Tamil Nadu

• Uttar Pradesh

• Karnataka

• Maharashtra

• West Bengal

These states have displayed high levels of entrepreneurial activity and strong implementation mechanisms, further boosting PMMY’s success.

Key Challenges and Way Forward

While the journey of PMMY has been impactful, certain challenges remain:

• Ensuring timely loan repayments

• Avoiding over-indebtedness among first-time borrowers

• Need for credit linkage with business training and support

The way forward lies in strengthening the credit monitoring system, offering capacity-building workshops, and integrating digital credit scoring tools to assess borrower viability.

Conclusion

As Pradhan Mantri Mudra Yojana completes a decade, it stands as a monumental initiative that has empowered India’s grassroots entrepreneurs, especially women and socially marginalised groups. With continued focus on financial inclusion, digital ease, and scalable credit, the scheme is poised to play a pivotal role in India’s next wave of economic growth and job creation.

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