Credit and Finance for MSMEs: Self-employment and entrepreneurship promotion scheme Pradhan Mantri Mudra Yojana (PMMY), launched by Prime Minister Modi in 2015, has disbursed 87 per cent of the loan quantity sanctioned in the course of the initial quarter of the monetary year (FY) 2021-22. Out of Rs 44125.74 crore loan quantity involved in 76,69,969 Mudra loan applications, Rs 38668.03 crore loan quantity was disbursed in a small more than the 3-month period from April 1 till July 9, 2021, according to the provisional information obtainable with PMMY. The disbursement price for the preceding monetary year FY21, nonetheless, had dropped to 94.7 per cent from 97.6 per cent in FY20 that had elevated marginally from 97 per cent in FY19.
“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) had told TheSpuzz Online.
PMMY was launched on April 8, 2015, to provide credit up to Rs 50,000 beneath Shishu cover followed by Rs 50,000 – 5 lakh worth loans beneath the Kishor cover and Rs 5 lakh – Rs 10 lakh beneath the Tarun cover to non-corporate, non-farm micro and little enterprises. The scheme was launched to address the challenge of lack of monetary help in the development of the non-corporate little organization sector. According to the scheme, more than 90 per cent of the sector, which comprises millions of proprietorship or partnership firms such as little manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, meals-service units, repair shops, machine operators, little industries, artisans, meals processors and other individuals, in rural and urban regions, does not have access to formal sources of finance.
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Importantly, the share of MSEs in India’s gross bank credit stood at only 9.7 per cent in April this year — declining for the fourth straight month from 12.11 per cent in December 2020, the MSE share contracted to 12.09 per cent in January 2021, 11.8 per cent in February, 11.3 per cent in March. The general gross bank credit as of April 2021, stood at Rs 108.60 lakh crore, according to the RBI’s June bulletin. Moreover, bank credit deployed to MSEs in April had witnessed unfavorable development, for the initial time considering the fact that Covid struck last year, to Rs 10.60 lakh crore, down 2.2 per cent from Rs 10.84 lakh crore in April 2020.
PMMY scheme is accountable for refinancing all last-mile financiers such as non-banking finance firms, microfinance institutions, societies, trusts, Section 8 Companies [formerly Section 25], little finance banks, and regional rural banks involved in lending to little firms in manufacturing, trading, services, and agri-allied activities.