PMMY: Role of financial institutions in micro financing

This study is based on the evolution of the Micro Units Development and Refinance Agency (MUDRA) and Pradhan Mantri Mudra Yojana (PMMY) launched in April 2015 for funding the non corporate small business sector. MUDRA was being set up to offer loans at low rates to micro-finance institutions and non-banking financial institutions (NBFC) which then provide credit to MSMEs. As per NSSO survey 2013, out of 5.77 crore small business, only 4% were getting finance from scheduled banks and rest were either facing financial crunches or were dependent on costly and informal sources of finance. So in continuation of initiatives taken by government towards generating financial sources for meeting their loan requirement, PMMY has been started. The paper focuses on analyzing the progress made within the horizons of micro financing in the country during FY 2015–16 after emergence of PMMY, and the contribution of various banks and Micro Financial Institutes (MFIs) in loans disbursement to non corporate small business sector. It concluded that public sector bank has been leading in financing but through Kishor and Tarun scheme while majority of funding under Shishu scheme has been done by NBFC-MFIs.