Non-Performing Mudra Yojana Loans Hit 9.8% of Outstanding Loans in FY25

The share of Non-Performing Assets (NPAs) under the Pradhan Mantri Mudra Yojana (PMMY) has increased notably, as per the reports. As per the data presented in Parliament, NPAs against the outstanding loan amount for Scheduled Commercial Banks (SCBs) stood at 9.81% as of March 2025, compared to 5.47% in March 2018.

NPAs on Disbursed Loans

When measured against the total loan amount disbursed, the NPA ratio was 2.19% at the end of March 2025, down from 2.71% in March 2018. Finance Minister Nirmala Sitharaman shared this information in a written reply to the Rajya Sabha.

Comparison with the MSME Sector

The NPA levels under PMMY are higher than those recorded for the broader Micro, Small, and Medium Enterprises (MSME) sector. As of March 2025, NPAs for MSMEs were 3.60% of outstanding loans. The higher levels under PMMY are linked to the scheme’s structure, which offers collateral-free loans often extended to first-time borrowers.

Government Steps to Improve the Mudra Scheme

The government has outlined measures taken to improve the implementation of the Mudra scheme. These include publicity campaigns, simplified application forms, a Credit Guarantee Scheme, the appointment of Mudra Nodal Officers, and regular reviews at both the ministry and bank level. 

Lending targets are set for financial institutions and distributed further on a state-wise basis.

Growth in Gold Loans

Separately, data from the Reserve Bank of India (RBI) showed strong growth in loans against gold jewellery. Such loans grew by 71.3% in December 2024 over December 2023, with an absolute rise of ₹71,858 crore. They accounted for 4.06% of the overall incremental non-food credit during this period.

A larger share of gold loans has been availed by women, reflecting increased use of household gold as collateral. The government noted that schemes such as Mahila Samriddhi Yojana, TREAD, and Stand-Up India are also available to expand financing access for women borrowers.

Read more: Lowering GST from 12% on Moving Goods Could Lead to ₹80,000 Crore Annual Revenue Loss

Conclusion

The Mudra Yojana continues to expand formal credit access, but rising NPAs indicate growing stress on outstanding loans. At the same time, gold-backed loans remain a rising segment of retail credit.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.