Why this matters now
PMMY is a flagship financial-inclusion and livelihood scheme, tested for its loan categories and impact. It links to MSMEs, employment and the JAM/DBT ecosystem.
What is PMMY?
Launched in 2015, PMMY provides collateral-free loans (currently up to ₹20 lakh) to non-corporate, non-farm micro and small enterprises through banks, NBFCs and MFIs. Loans are refinanced/guaranteed via the MUDRA (Micro Units Development & Refinance Agency) framework.
Loan categories
Loans are graded by the stage of the enterprise:
- Shishu — smallest loans (up to ₹50,000), for new/very small units;
- Kishore — mid-range (₹50,000-₹5 lakh), for growing units;
- Tarun — larger (₹5-10 lakh, now extended to ₹20 lakh as “Tarun Plus”), for established units.
Impact and challenges
PMMY has disbursed crores of loans, supporting self-employment, women and first-time entrepreneurs, and deepening financial inclusion. Challenges include rising non-performing assets (NPAs), small average ticket sizes, and ensuring loans translate into sustainable enterprises and jobs.
UPSC angle
Know PMMY (2015, collateral-free loans to non-corporate micro/small units), the Shishu/Kishore/Tarun categories, and the NPA/sustainability challenge. Links to financial inclusion & MSMEs.
Frequently asked questions
What is the PM MUDRA Yojana?
A 2015 scheme providing collateral-free micro-loans to small, non-corporate, non-farm enterprises to promote entrepreneurship and financial inclusion.
What are the three MUDRA loan categories?
Shishu (up to ₹50,000), Kishore (₹50,000-₹5 lakh) and Tarun (₹5-10 lakh, extended to ₹20 lakh).
Are MUDRA loans collateral-free?
Yes — they are collateral-free loans provided through banks, NBFCs and microfinance institutions.
What are the challenges of PMMY?
Rising NPAs, small average loan sizes, and ensuring the loans create sustainable enterprises and jobs.