Kumar Vikram By

NEW DELHI: Among the welfare programmes the Narendra Modi government touts as a success story is the Pradhan Mantri Mudra Yojana, a financial initiative to provide loans to micro-units to help them develop their business and generate employment. Interacting with Mudra beneficiaries in May this year, Modi said the scheme had fulfilled people’s dreams of setting up small businesses and generate jobs for others.

Similarly, talking at an event last year BJP president Amit Shah said 7.28 crore people had become self-employed under the Centre’s Mudra loan scheme in the past three years. But what is left unsaid is that nearly J11,000 crore loan given to 13.85 lakh account holders have turned into bad loan, a Right to Information application by The Sunday Standard has revealed.

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The PMMY was launched on April 8, 2015. Under the scheme, banks are required to finance micro-entrepreneurs with loan requirement up to J10 lakh.Loans are granted under three categories — up to J50,000 come under the ‘Shishu’ category, between J50,001 and J5 lakh under ‘Kishore’ and between J5,00,001 and J10 lakh under ‘Tarun.’

About 13.47 crore account holders have been sanctioned loans amounting to more than J6.37 lakh crore as of August 3 this year, the RTI application revealed. The data has also disclosed that J10,915.07 crore loan has turned into NPA and the maximum number of defaulters are those who have taken loan under the Shishu category.

While experts do not question the objective of the Mudra scheme, they cited two reasons for the NPAs. The first is that loans are being given without any collateral or security, making it difficult for banks to go after defaulters. The second is the over-emphasis on banks to meet loan disbursal targets. In the race to meet the target, the credentials of loan seekers were not being properly verified.

Talking about the lack of security, Devinder Sharma, a policy expert, said the government had not learnt from the failure of similar government schemes in the past. “I remember that a similar scheme was launched by Haryana CM Devi Lal and a major portion of the scheme had turned into NPAs. In this scheme also the government has just doled out money to people without any security and lakhs of the accounts turned into NPAs.”

Bank officials admitted that there were some flaws in the policy. Ashwini Rana, vice president of the National Organization of Bank Workers, blamed the unsecured loans for the NPAs. “Banks want to help, but people have misused it,” he said. Rana also said that the scheme should not be target-oriented. “It should not have any target. But, a target was fixed and banks started fulfilling the target.”

Government data about achieving targets appear to support what the bankers said. It is revealing that in the three years since the scheme was launched, banks have always exceeded the loan disbursal target, never under-achieved.

In 2015-16, while the target was to disburse J1,22,188 crore in loan, banks gave out J1,37,449 crore loan. In 2016-17, the corresponding figures were J1,80,000 and J1,80,529 and in 2017-18 (as of September) they were J2,44,000 crore and J2,53,677 crore.Yugal J Rayalu, secretary of the All-India Progressive Forum, sensed a scam in the whole scheme. “The BJP and its cadre are distributing money to the wrong people. There is big corruption going on and it’s like a major scam. Ninety per cent of the money has been given to the wrong people and this was bound to happen.”

Scheme covers large bandwidth of institutions

The Mudra website states loans of up to C10 lakh are given to the non-corporate, non-farm small/micro enterprises by commercial banks, RRBs, small finance banks, cooperative banks, Microfinance Institutions and non-banking financial companies.

Biggest loan defaults

Loans under Pradhan Mantri Mudra Yojana are granted under three categories — up to J50,000 come under the ‘Shishu’ category, between J50,001 and J5 lakh under ‘Kishore’ and between J5,00,001 and J10 lakh under ‘Tarun’. Maximum defaulters are those who have taken loans up to J50,000