Government To Make Mudra Loan Rules Stricter, Making It Harder To Get A Loan - Check Details
The Pradhan Mantri Mudra Yojana (PMMY), launched to boost self-employment across India, has been a lifeline for many aspiring entrepreneurs. Offering loans at concessional rates with government backing, the scheme has seen widespread adoption. However, the days of easy access to Mudra loans may soon be over as the government plans to tighten the eligibility criteria .
Stricter Eligibility Criteria for Mudra Loans
The government, led by its think tank Niti Aayog , is preparing to introduce more stringent guidelines for Mudra loans. A key aspect of the proposed changes involves thorough background checks to ensure that only eligible candidates can avail of these loans. This move aims to reduce the risk of defaults and improve the overall effectiveness of the scheme.
Niti Aayog's Recommendations
In its recent report, titled 'Impact Assessment of Pradhan Mantri Mudra Yojana,' Niti Aayog has recommended implementing e-KYC for loan underwriting. This digital verification process would make it easier to assess the borrower’s eligibility, ensuring that the benefits of the scheme reach the right people. The shift to e-KYC, while potentially complicating the loan application process, could lead to more secure and efficient loan disbursals.
Understanding the Mudra Loan Scheme
The Mudra Loan Scheme, designed to foster entrepreneurship and job creation, has been instrumental in providing financial support to small businesses. The 2024 Budget saw the maximum loan limit increase from ₹10 lakh to ₹20 lakh, reflecting the government's commitment to supporting micro-enterprises. However, due to limited documentation, verifying the authenticity of applicants has been a challenge—a gap that the new e-KYC recommendations aim to address.
A Look Back: The Launch of the Mudra Scheme
Since its inception in 2015, the Mudra scheme has made a significant impact. According to official data, nearly 40 crore loans have been sanctioned, totaling ₹18.39 lakh crore. Despite its success, the scheme's lack of collateral requirements has led to a higher risk of defaults. The proposed stricter rules are expected to mitigate this risk by enabling banks to assess potential defaulters better.
As the government moves to tighten the rules around Mudra loans, applicants may face more hurdles in securing funds. However, these changes are intended to safeguard the financial system and ensure that only genuinely deserving candidates benefit from this important scheme.