Banks in India -Efficiency in financing entrepreneurs and small businesses under PMMY scheme: DEA approach

This study, for the first time, empirically analyzes banks’ efficiency in implementing a government scheme that promotes entrepreneurship. It examines the relative technical and scale efficiency of 42 Indian banks, including a comparative efficiency between private and public sector banks in providing loans, under the Prime Minister MUDRA Yojana Scheme (PMMY), launched by the Government of India, to promote entrepreneurship and facilitate easy access to capital for small and micro units, including the start-ups, by using data on the number of loans sanctioned and amount of loan disbursed under the scheme. The study found that Indian banks have been less efficient in implementing the PMMY. Public sectors banks were more efficient in providing loans under the scheme and providing loans to start ups under the scheme than the private sector banks. The study revealed that banks efficiency scores give the policy makers a better picture of their relative performance as it takes into account the differences in size, branch network, back end technology and profitability rather than the number of loans sanctioned.