Non-performing assets (NPAs) under Prime Minister Narendra Modi’s flagship Pradhan Mantri Mudra Yojana (PMMY) have seen a jump of over 137% since March 2018.
The NPA on Mudra loans by public sector banks, which also includes regional rural banks, jumped to Rs 17,250.73 crore as on March 2019, the government informed Parliament on Tuesday. In March 2018, loans worth Rs 7,277.32 crore of public sector banks had turned bad.
However, total loans that have turned bad are less than 2% of the total loans issued under the flagship scheme meant for providing loans up to 10 lakh to non-corporate, non-farm small/micro enterprises.
The total loan issued under PMMY amounts to over Rs 8.93 lakh crore till the end of March 2019, Minister of State for Finance Anurag Singh Thakur told Rajya Sabha in a written reply.
According to Mudra website, total loans disbursed till date were close to Rs 9.16 lakh crore.
“Out of Pradhan Mantri MUDRA Yojana loans amounting to over Rs 8,93,000 cr sanctioned by member lending institutions (MLIs) up to 31.03.2019, loans amounting to approximately 2%, i.e. Rs 17651.74 crore (provisional) have turned into NPAs, since inception of the scheme,” the minister said.
Member lending institutions include non-banking finance companies (NBFCs) and NBFC-MFIs. The total bad loan by these two amount to Rs 400.88 crore.
Under the RBI norms, an account is classified as an NPA account if it is not serviced for 90 days in case of national banks and 120 days in case of NBFCs and MFIs.
Business failures, inefficiencies in lending practices, poor credit appraisal, willful default by borrowers and impaired cash flows of the units due to slowdown in business were among the reasons cited by the minister for Mudra loans turning bad.
Mudra scheme was launched in April 2015.
According to Mudra website, Karnataka and Tamil Nadu were the only two states which disbursed maximum amount of Mudra loans in 2018-19. Karnataka issued over Rs 29,000 crore to its beneficiaries and was only behind Tamil Nadu, which disbursed close to Rs 34,000 crore.