News:The Reserve Bank of India (RBI) has expressed concern over rising bad loans from Pradhan Mantri MUDRA Yojana(PMMY).
About Rising Bad loans in MUDRA Yojana:
- The RBI Deputy Governor said that MUDRA was launched with the objective of lifting many beneficiaries out of poverty.
- However,there have been concerns at the growing level of non-performing assets(NPAs) among these MUDRA borrowers.
- The data has shown that non-performing assets ratio or bad loans as a percentage of MUDRA loans were at 2.68% in 2018-19 from 2.52% in the 2017-18.
- Hence, the RBI has asked the Banks to focus on repayment capacity at the appraisal stage and monitor the loans through the life cycle much more closely.
About Pradhan Mantri MUDRA Yojana(PMMY):
- Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Prime Minister in 2015.
- It aims for providing loans up to 10 lakh to the non-corporate, non-farm small/micro enterprises.
- These loans are given by Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs.
Categories of Loans:
- The loans under Mudra are given under different categories viz. ‘Shishu’, ‘Kishor’ and ‘Tarun’.These categories are based on the stage of growth or development and funding needs of the beneficiary.
- Sishu covers loans up to Rs. 50,000.Kishore covers loans above Rs. 50,000- and up to 5 lakh and Tarun covers loans above Rs. 5 lakh and up to Rs.10 lakh.
About Non Performing Asset(NPA):
- A non performing asset (NPA) is a loan or advance for which the principal or interest payment remains overdue for a period of 90 days.
- The banks are required to classify NPAs further into Substandard, Doubtful and Loss assets.