Gujarat: Bad debts under Prime Minister’s MUDRA scheme rise 69% in pandemic year


Mehsana resident Arvind Patel, who deals in decorating ‘mandaps’ for events and gatherings, borrowed Rs 7.2 lakh under the Pradhan Mantri MUDRA Yojana (PMMY). He used the loan to expand his business. “Previously we employed eight people, now we employ 12,” Arvind said as he interacted virtually with Prime Minister Narendra Modi during “Garib Kalyan Sammelan” on Tuesday.

When Prime Minister Modi asked if he would return the loan to the bank on time, Arvind replied in the affirmative. In response, the Prime Minister praised the small entrepreneur for creating jobs under the PMMY, which was launched in April 2015 and provides loans of up to Rs 10 lakh to non-commercial and non-agricultural small and micro businesses.

Arvind was one of several recipients the Prime Minister spoke with virtually while addressing the event from Shimla. In his speech at the event in Shimla, Prime Minister Modi said that 70% of MUDRA beneficiaries were women who became entrepreneurs and provided employment.

However, it is not a very rosy picture for the banks that have been lending money under the Central program to Gujarat for the past seven years since it was launched. The scheme has seen a number of defaults in the state, with lenders seeing their non-performing assets (NPAs) increase by 69% over the past year.

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According to the latest available figures from the State Level Banker’s Committee (SLBC), Gujarat banks have an NPA of Rs 957 crore, 9.13% of total outstanding in December 2021. NPAs under PMMY have inflated by 69% (See the table) over the past year compared to December 2020, as loans taken by small borrowers have deteriorated due to Covid-lockdown-induced strains.

Non-Performing Assets (NPA) under the Mudra Diet in Gujarat

If the bad debts of individual banks under the program are taken into account, Canara Bank at 56% has the highest NPA percentage, followed by Bandhan Bank (24.63%), State Bank of India (22 ,36%). and National Bank of Punjab (22.7%).

Among the total Rs 957 crore NPA under the MUDRA scheme, the highest percentage of bad loans are found at Shishu (loans up to Rs 50,000) and Tarun (loans in the Rs 5-10 lakh range). While 9.91% (Rs 129 crore) of outstanding Shishu loans are NPAs, the percentage of bad loans in Tarun is 9.71% (Rs 392 crore).


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