India is set to top the Rs 2,00,000 crore mark in loans offered to millions of small and tiny enterprises in 2017-18 under the Pradhan Mantri Mudra Yojana (PMMY), a flagship refinance scheme that Modi-government launched in 2015.

Nearly four million small entrepreneurs, involved in diverse businesses ranging from neighbourhood grocery stores to micro dairy units and carpentry services, availed loans up to Rs 10 lakhs in 2016-17 through the scheme.

A majority of these loans were given in opposition-ruled states including West Bengal and Tamil Nadu, a sign that one of NDA government’s signature financial inclusion plans have cut across political lines to aid cash-starved micro entrepreneurs.

“During the first two years of its operations, the targets set by the government have been achieved,” Jiji Mammen, managing director-chief executive officer, MUDRA, told Moneycontrol.

Mudra loan disbursals in 2015-16 stood at Rs 1.37 lakh crore, 12 percent higher than the budgeted target of Rs 1.22 lakh crore. In 2016-17, Rs 1.81 lakh crore loans were given out against a target of Rs 1.8 lakh crore.

“Encouraged by the success of the scheme, the government has set a higher target of Rs 2.44 lakh crore for the current FY18. Banks including Regional Rural Banks and Urban Cooperative Banks, MFIs, NBFCs, etc. are geared up to achieve the set targets,” Mammen said.

Mudra was launched in 2015 through which government extends loans through banks, non-banking financial companies (NBFCs) and micro-finance institutions (MFIs) to small and tiny enterprises. The scheme is part of the government’s broad plan to make reasonably priced small-ticket loans to micro enterprises that otherwise conventional banks overlook.

Loans are clubbed into three categories—Shishu (up to Rs 50,000), Kishor (Rs 50,000 to Rs 5 lakh) and the Tarun (Rs 5-10 lakh).

A Moneycontrol analysis showed that more than 7 out of 10 loans (71 percent) of all Mudra loans since April 2015 were concentrated in 10 states—Tamil Nadu, Karnataka, Maharashtra, Uttar Pradesh, West Bengal, Madhya Pradesh, Bihar, Odisha, Gujarat and Assam.

These states (on the basis of number of accounts financed) received loans to the tune of Rs 96,589.81 crores in 2015-16, accounting for more than 72 percent of the total, and 71 percent of the total in 2016-17.

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