This makes MUDRA an imperative tool for leveraging our demographic dividend and generating employment. On the other hand, huge loans given to large industries employing fully mechanized production methods have less focus on employment. As per our research, for every loan disbursed under MUDRA about 1.3 jobs have been generated. Not only empowering the loan seeker, but job seekers are also turned into job creators by leading a multiplier impact on the market. The scheme has a huge potential of job generation and has been a key instrument for creating livelihoods and jobs for the lowest socio-economic segments of our society today. However, it is important to understand that it is the overall value of money under risk is what is of primary concern to the banking sector. The entire amount lent under MUDRA is less than that! Touting MUDRA a failure on those accounts is loosely interpreted.Ī large number of risk portfolios may be directly interpreted as a higher risk of loans going bad. It would be unjustified and short-sighted to dub the scheme as a failure and tightening its noose and scuttling growth of microenterprises.Ĭonsidering RBI report released last year in March, there were 4,387 large borrowers accounting for Rs 8.6 Lakh crore or 90% of NPAs of the banking sector. Also, According to the 2017-18 annual report of PMMY, while gross non-performing assets (NPA) across all sectors in the country crossed 10% in fiscal 2017-18, the NPA level under PMMY was only 5.38% as on March 31, 2018. Now considering Rs 11,000 crore NPAs under MUDRA, which is just 1.5 % of the total disbursed amount, a minuscule percentage when compared to the NPA burden from lending to large companies. Since inception, a total of Rs 7,17,842.16 crore have been disbursed as loans under MUDRA (as per official website). The recent report on MUDRA loans leading to NPAs up to Rs 11,000 crore, however, needs to be looked from a broader perspective. However, skeptics have been, from the very beginning, doubting the efficacy of the scheme and its impact on rising NPAs owing collateral free nature of the loans extended. Considering the latest survey results, around 11 crore people are dependent on self-enterprise or in the MSME space, further underscores the need for financial push and support. The scheme provides non-farm loans up to Rs 10 lakh to small entrepreneurs. Government’s flagship scheme Pradhan Mantri MUDRA Yojana was launched in 2015 and is being perceived as an elixir for the MSME sector, accounting for 90% of total number of enterprises and also 90% of non-agriculture employment whose growth had been hindered due to constraints in access to finance. What started with a clarion call from the Prime Minister to understand the ‘energy’ of nation’s entrepreneurial workforce, MUDRA Yojana has ever since been promoting small businesses and fuelling job growth.
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