FINANCIAL PERFORMANCE ANALYSIS OF MUDRA YOJANA (2018–2022): A RESEARCH STUDY

Abstract

The Pradhan Mantri Mudra Yojana (PMMY) is a premier effort of the Government of India designed to "fund the unfunded" by incorporating small and micro-businesses into the official banking system and offering them accessible financial assistance. This scheme allows micro-borrowers to obtain loans of up to ₹10 lakhs from various financial institutions, including public sector banks, regional rural banks, cooperative banks, private and international banks, microfinance institutions (MFIs), and non-banking financial firms (NBFCs). The initiative was formally inaugurated by the Honourable Prime Minister of India on April 8, 2015. In India, employment generation is largely driven by small enterprises rather than large industries. While large enterprises employ around 1.25 crore individuals, small and micro units provide jobs to approximately 12 crore people, making them a vital source of livelihood, particularly for unskilled and semi-skilled workers. After agriculture, this sector employs the highest proportion of individuals from low-income backgrounds. However, many aspiring entrepreneurs from these groups face significant challenges in obtaining finance, as traditional banks often consider them ineligible for credit. In response to this challenge, the MUDRA Yojana was established to foster self-employment and facilitate the development of micro and small firms. The article explores the objectives, functions, and significance of MUDRA Bank in facilitating the development of micro-business units and analyses the evolution and progress of the scheme between 2015 and 2019.