News:The Reserve Bank of India (RBI) has expressed concern over rising bad loans from Pradhan Mantri MUDRA Yojana(PMMY).
Facts:
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.
Additional information:
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.
