• Mudra Yojana, the scheme which the central government takes pride in, met with a concern when former RBI governor Raghuram Rajan submitted his report to the MP's panel.
• According to report submitted by former RBI governor, the next crisis in India's banking sector could come from loans given to the unorganised micro and small business, called MUDRA (Micro Units Development and Refinance Agency) loans, and credit extended through the Kisan credit card.
• He also flagged the Credit Guarantee Scheme for MSME's (Micro, Small and Medium Enterprises), run by the SIDBI (Small Industries Development Bank of India) as 'a growing contingent liability', which needs to be examined with urgency.

About The Pradhan Mantri Mudra Yojana (Pmmy) Scheme

• The objective of MUDRA scheme is to refine collateral-free loans given by the lenders to small borrowers. It has a corpus of Rs 20,000 crore and has the provision of lending from Rs 50,000 to Rs 10 lakh to small entrepreneurs.
• As per data from the MUDRA website, a total of Rs 6.37 lakh crore has been disbursed under the MUDRA scheme till date by public and private sector banks, regional rural banks, and micro-finance institutions.
• The unique feature of this scheme is that the MUDRA Card permits an access to working capital through ATMs and card machines.

There Are Three Types Of Loans Under Pmmy:

• Loans up to Rs 50,000 are categorized as SHISHU
• Loans from Rs 50,001 to Rs 5 lakh are categorized as KISHORE
• Loans from Rs 5,00,001 to Rs 10 lakh are categorized as TARUN
• While there is no processing fee for Shishu and Kishore, Tarun loan attracts a fee of 0.5 per cent of the loan amount (plus applicable tax).

Analysis:

• MUDRA loans are available for non-agricultural activities and activities allied to agriculture such as dairy and poultry. It aims to fund those who have a business plan to generate income from a non-farm activity -- like manufacturing, processing, or trading -- but don't have enough capital to invest.
• PMMY scheme also puts in place MUDRA Bank which monitors the network of microfinance institutions and also helps to register new institutions as well.
• MUDRA scheme aims to reduce the unemployment by providing micro enterprises with credit facility which will not only increase the country's GDP but also create jobs.
• The scheme also aims to boost the financial inclusion by taking the last mile credit delivery to micro businesses. It also works on the entry of the informal economy into the formal sector as most of the time income from the informal sector is not taxed.