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RBI Raised Red Flag on MUDRA Loans NPAs:

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Reserve Bank of India (RBI) has raised a red flag on the spike in non-performing assets (NPAs) under the government’s flagship scheme to support micro-enterprises in the country – the Pradhan Mantri Mudra Yojana. According to Finance Ministry sources, RBI has cautioned the ministry that the scheme might turn out to be the next big source of NPAs, which have plagued the banking system, reports IANS.

The central bank has flagged that bad loans under PMMY have risen to Rs 11,000 crore. As per the annual report of PMMY, 2017-18, total disbursements under the scheme stood at Rs 2.46 trillion in FY 18. Out of this, 40 per cent were disbursed to women entrepreneurs and 33 percent to social categories. More than 4.81 crore micro-borrowers have benefited through PMMY during the year FY2017-18.

The PMMY was launched on April 8, 2015. Under the scheme, banks are required to finance micro and small entrepreneurs for up to Rs 10 lakh. Loans can be granted under three categories – up to Rs 50,000 under ‘Shishu’; Rs 50,001-Rs 5 lakh under ‘Kishore’ and between Rs 5,00,001 and Rs 10 lakh under ‘Tarun’ category. In addition, RBI’s caution comes at a time when the country’s financial system in reeling under sevier stress due to the IL&FS crisis which continues to hurt banks with impairments, the most recent case being IndusInd Bank.

SMEStreet Edit Desk

SMEStreet Edit Desk is a small group of excited and motivated journalists and editors who are committed to building MSME ecosystem through valuable information and knowledge spread.

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