PM Mudra has transformed India’s credit architecture |
The structural transformation of the Indian economy over the past decade has been anchored by a fundamental shift in the credit architecture, moving away from a historically top-heavy banking model toward a decentralized, inclusion-driven framework. At the vanguard of this revolution is the Pradhan Mantri Mudra Yojana (PMMY), launched in 2015 with the strategic mission of “funding the unfunded”. For an economy where micro, small, and medium enterprises (MSMEs) form the backbone – employing over 25 crore people and contributing nearly 30 per cent of GDP – the availability of formal, collateral-free credit has transitioned from a policy aspiration to a vital economic reality.
As of late March 2026, the PMMY has facilitated the flow of Rs 39.18 lakh crore across 57 crore loan accounts, marking one of the most ambitious microfinance interventions in global history. The PMMY’s design recognized that the “bottom of the pyramid” was historically credit-starved not due to a lack of entrepreneurial energy, but due to institutional rigidities and the absence of collateral. By removing the requirement for security-free credit and providing refinancing support through MUDRA, the government effectively lowered the barrier to entry for millions of micro-entrepreneurs.
Analysis of disbursement trends reveals a significant “graduation effect” over the scheme’s decadal journey. In its nascent years, the Shishu category (up to Rs 50,000) dominated the portfolio. However, data from 2025 indicates a robust upward shift. The share of Kishor loans (Rs 50,000 to Rs 5 lakh) grew from 5.9 per cent in FY16 to 44.7 per cent in FY25. This trend indicates that........