Defaults in Pradhan Manrti Mudra Yojana (PMMY) are no concern for the government as most of the loans below Rs 1 crore are securitised even as the Reserve Bank has reportedly alerted the finance ministry over the rising bad debt under the scheme, said media reports.
Financial services secretary Rajiv Kumar said that small borrowers are far more responsible and responsive than large corporate borrowers, according to a report in The Economic Times.
"If you look at the cases in Debt Recovery Tribunals, most loans below Rs 1 crore are securitised,” he said, adding that such loans are also the way forward, given the economy is getting formalised and “you want the youth and unfunded to get out of money lenders’ clutches”, the report said.
Meanwhile, the Reserve Bank of India (RBI) had alerted the finance ministry over the rise of non-performing assets (NPAs) under the Mudra Yojana and said that the scheme could become next big source of bad loans, reported News 18.
The RBI cautioned that NPAs under PMMY rose to Rs 11,000 crore and according to the annual report of the Mudra Yojana 2017-18, total disbursements under the scheme stood at Rs 2.46 lakh crore in FY 18, the report said.
Prime Minister Narendra Modi had in May 2018 said that loans worth Rs 6 lakh crore had been given to 12 crore beneficiaries under the Mudra scheme, his government's ambitious project for promoting entrepreneurship and small businesses, reported PTI.
PMMY was launched by the Prime Minister on 8 April, 2015, for providing loans of up to Rs 10 lakh to the non-corporate, non-farm small/micro enterprises.
During FY 2017, the government had extended Rs 2.53 lakh crore credit under the Mudra Yojana.
In May 2018, the finance ministry had tied up with 40 entities including Flipkart, Swiggy, Patanjali and Amul, which are big job creators, for extending loans to small entrepreneurs under the Mudra scheme.
"We have identified about 40 companies as biggest job creators. These companies will identify people who need loans under Mudra Yojana, underwrite them and we will extend loans under the scheme," financial services secretary Rajiv Kumar told PTI.
He said that people who need money under the Mudra scheme approach the banks, but with this initiative the financial services department is trying to reach out to those who need loans for their businesses but have not approached the banks.
The companies which tied up with the financial services department for this include Make My Trip, Zomato, Meru Cab, Muthoot, Edelweiss, Amazon, Ola, Amazon, Big Basket, Carz on Rent and Habib Salon.
— With PTI inputs
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Updated Date: Jan 15, 2019 13:06:04 IST