Pradhan Mantri Mudra Yojana: Features, Field Study Observations, and Global Best Practices
"Explore the features of Pradhan Mantri Mudra Yojana (PMMY) offering loans for income-generating activities, insights from a field study, learnings from global best practices, identified problems, and the potential of e-mudra technological platform."
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Presentation Transcript
Pradhan Mantri Mudra Yojana (PMMY) Project by: Shailesh Yadav Vijay Kulange Asst Secretaries, Dept of Financial Services 1
PMMY - Features Loans for non-farm sector income generating activities Shishu- upto Rs. 50,000/- Kishore- above 50,000/- and upto Rs.5 lakh Tarun- above Rs.5 lakh and upto Rs.10 lakh Interest rate not beyond 12% per annum Simplified application form , No collateral Working capital accessed through MUDRA RuPay card No processing fee & margin money on Shishu loans 2
Field Study: Observations AP and Odisha Loans mostly to existing entrepreneurs Field verification by banks in all cases Most borrowers- first time bank loan, term loans Average no. of visits to the branches: 3-5 Record of rejected cases notavailable with the banks Little convergence with Skill Development Schemes Borrowers prefer flexible repayment options 3
Learnings from Global Best Practices Grameen (Bangladesh), BancoSol (Bolivia), UnitDesa (Indonesia), Mibanco (Peru), Equity bank (Kenya) Incremental Model: Start with very small test loans Diversified Services: Savings, Loans, micro insurance Handholding: Business skills, utilisation monitoring Use Savings account history for credit worthiness Emphasis on business profitability & experience 4
Problems Identified Borrowers: Access, Timeliness, Flexibility Banks/Financial Institutions: Ensuring repayment of loans (loan quality) High cost of disbursing & recovering small loans Government: Over-indebtedness & unethical practices Alignment with Skill Development Programmes PMMY loans being perceived as doles/hand-outs 5
e-mudra : Smart Technological platform To be owned & operated by MUDRA Will receive, store, analyse & disburse all data on lenders, borrowers & repayments Using NUUP (National Unified Ussd Platform) : the existing multilingual mobile banking platform of NPCI (National Payment Corporation of India) *99# , works offline also MIS: information down to the level of individual borrower 6
e-mudra : Smart Technological platform Creates credit history for each individual over time using: Unique Id (ADHAAR no. when permitted/others) All transactions throughe-mudra platform Mobile /DTH recharge history, Electricity bill history National Skill database Enables flexi repayments using mobile prepaid vouchers Recommends larger & easier loans for prompt re-payers 7
PMMY with e-mudra: Process Flow Dials *99# /App & chooses PMMY option Enters Unique ID/ADHAAR no. ,Amount applied for, Consent to share data with the platform Borrower Analysis of user data: eKYC, Other database Requisition to bank branch with Analysis report sms to borrower: application receipt, sanction/rejection, repayment reminders e-mudra 8
PMMY with e-mudra: Process Flow Field verification & sanction/reject within 07 days Uploads all data on e-mudra Credits amount into borrowers account, issues RuPay card Bank Uses the disbursed amount as per his/her need Daily/flexible repayment option using mobile recharge coupons in addition to traditional methods Borrower 9
Supplementary measures Financial Literacy Campaign: Mobile banking, Savings, Types of loan, Project preparation Campus loan programs: self-employment Handholding Market linkage: e-commerce Monitoring loan utilisation: Bank Mitras Success stories, Recognition & Rewards 10
Looking Ahead: the future Maturing of Small Business Finance Ecosystem Integration of Small Banks, Payment Banks Integration of private borrowers, last-mile financiers: regulated P2P (person to person) lending Competition among lenders, choice for borrowers Banks/FIs Multiple offers with different terms & conditions Borrower chooses one Last-mile financiers e-mudra Individuals 11
Thank you Thank you The key to ending extreme poverty is to enable the poorest of the poor to get their foot on the ladder of development . . . the poorest of the poor are stuck beneath it. They lack the minimum amount of capital necessary to get a foothold, and therefore need a boost up to the first rung. - Jeffrey Sachs 12
