Economically weaker sections are getting more benefit from Pradhan Mantri Mudra Yojana distribution

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New Delhi: According to research by SBI Research, Pradhan Mantri Mudra Yojana (PMMY) disbursements are enhancing financial inclusion in developing states and helping financially disadvantaged areas more. “A financial inclusion metric shows Mudra disbursements have a stronger impact on states with lower financial inclusion levels,” the research said.

States with a higher percentage of payments to women have demonstrated significantly higher employment creation by women-led MSMEs, according to the report, which examines the effects of PMMY. This further supports the effectiveness of targeted financial inclusion policies in promoting economic empowerment and labor market participation.

According to the SBI research, there has been a beneficial structural change in the general variety (entropy) of Mudra disbursements, despite the fact that this skewness has increased.

The report emphasizes that while underdeveloped regions like Bihar (from 5.67 percent to 10.97 percent), Uttar Pradesh (from 9.27 percent to 11.30 percent), Odisha (from 4.24 percent to 4.51%), and the Northeast have seen notable increases, the proportions allotted to developed regions have decreased. This indicates that the Mudra plan has been strategically refocused on areas that are most in need of it.

To develop and refinance micro units, the Indian government established the Pradhan Mantri Mudra Yojana (PMMY) under the Micro Units Development and Refinancing Agency (MUDRA).

Established in 2015, PMMY guarantees that Member Lending Institutions (MLIs), such as Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), Non-Banking Financial Companies (NBFCs), and Micro Finance Institutions (MFIs), provide collateral-free institutional loans up to Rs 20 lakh.

The paper also emphasizes how improved financial circumstances for female borrowers result from more women participating in PMMY. Women make up around 68% of the scheme’s account holders.

The report noted that during the past nine years (FY25 over FY16), the amount of PMMY disbursements per woman has increased by a compound annual growth rate (CAGR) of 13% to Rs 62,679, while the amount of incremental deposits per woman has increased by a CAGR of 14% to Rs 95,269, making PMMY an effective power tool for women’s empowerment at the grassroots level.