Pradhan Mantri MUDRA Yojana (PMMY) is a bold step by the Indian government to “fund the unfunded”, to develop the micro-enterprise sector. The scheme is based on the premise that providing institutional finance to micro/small business units will turn these entities into instruments of growth, employment generation, and development. The objective of the scheme is to develop and refinance all banks and micro-finance institutions (NBFC-MFIs) in the business of lending to micro/small business entities engaged in manufacturing, trading, and service activities.
MicroSave conducted an independent point-in-time assessment of the PMMY during the month of July 2016. This Policy Brief highlights the effectiveness, impacts and challenges of the PMMY, and assesses the capacity of MUDRA to deliver its mandate to finance those unable to get loans under the conventional system.