Finance Minister Nirmala Sitharaman has reaffirmed the transformative role of the Pradhan Mantri Mudra Yojana (PMMY) in supporting small-time entrepreneurs across India by providing collateral-free credit, enabling millions to turn their business ideas into reality without the burden of security or guarantees.
Answering a question in the Rajya Sabha on the scheme's impact, FM Sitharaman highlighted that PMMY offers loans under three main categories: Shishu (up to Rs 50,000), Kishor (Rs 50,001 to Rs 5 lakh), and Tarun (Rs 5 lakh to Rs 10 lakh).
These tiers cater to businesses at different growth stages, from startups to expanding ventures, fostering financial inclusion for micro and small enterprises in the non-corporate, non-farm sector. As of March 31, 2025, the latest data reveals the recovery performance across categories.
The non-performing assets (NPAs) or outstanding loans classified as stressed stand at 12.4 per cent against the total lent amount in the Shishu category, 9.4 per cent in the Kishor category, and 7.92 per cent in the Tarun category. Banks are actively pursuing recovery measures to address these amounts, reflecting ongoing efforts to maintain the scheme's sustainability while supporting borrowers.
The Finance Minister addressed concerns regarding the relatively low disbursement under the recently introduced Tarun Plus category, which extends collateral-free loans up to Rs 20 lakh for entrepreneurs who have successfully repaid their previous Tarun loans.
Launched following the Union Budget 2024-25 announcement and made effective from October 2024, Tarun Plus is designed to reward compliant borrowers and help scale their operations further. FM Sitharaman explained that the scheme is only about a year old, stating, “To revise this scheme properly, we would like to give it some time as it is only a year old.”
She emphasised the need for patience to allow the category to gain traction, as more eligible entrepreneurs become aware and apply after demonstrating repayment discipline. Since its inception in 2015, PMMY has disbursed over Rs 32 lakh crore through more than 52 crore loans (with provisional FY 2024-25 figures showing additional sanctions of around Rs 5.5 lakh crore).
A significant portion -- nearly 68 per cent -- has benefited women entrepreneurs, promoting gender-inclusive growth and grassroots economic empowerment. The government remains committed to expanding access to credit for small businesses, with recent extensions and enhancements underscoring its focus on self-reliance and job creation.
FM Sitharaman's remarks come amid broader discussions on financial sector health, where overall MSME NPAs remain lower at around 3.6 per cent as of March 2025, compared to Mudra-specific figures.