PMMY Loans’ Disbursal Reach All Time High at ₹5.64 Lakh Cr in FY26

Why It Matters

The surge in PMMY credit deepens financial inclusion for India’s micro‑businesses while maintaining asset quality, bolstering the broader MSME ecosystem. Lower NPAs and expanded loan limits signal stronger repayment discipline and growth potential for small enterprises.

Key Takeaways

• Disbursal hits ₹5.64 lakh cr, record high.
• Over 4.57 crore loans issued FY26.
• NPAs fall to 2%, half of five-year level.
• 60% loans under ₹30k, targeting micro‑entrepreneurs.
• Tarun‑plus expands credit up to ₹20k, boosting larger MSMEs.

Pulse Analysis

The Mudra programme, launched in 2015, has become a cornerstone of India’s financial‑inclusion strategy, channeling cheap credit to the country’s vast informal sector. FY26’s disbursal of ₹5.64 lakh crore marks a continuation of a steady upward trajectory that began after the pandemic‑induced slowdown, reflecting both heightened demand for working capital and the effectiveness of government‑driven outreach. By leveraging public‑sector banks and the Credit Guarantee Fund for Micro Units, the scheme mitigates lender risk while extending credit to previously underserved entrepreneurs.

A deeper look at the loan mix reveals that the majority—over 60%—still fall below ₹30,000, catering to petty traders, artisans, and women‑run micro‑enterprises. The introduction of the Tarun‑plus tier, which pushes the upper limit to ₹20 lakh, has broadened the programme’s appeal to scaling MSMEs seeking larger investments for equipment or expansion. This tiered structure not only diversifies the credit portfolio but also appears to have improved repayment discipline, as evidenced by the drop in non‑performing assets to roughly 2%, half the level recorded five years earlier.

For banks, the surge in Mudra lending offers a dual benefit: it fuels loan growth without compromising asset quality and aligns with regulatory incentives for priority sector lending. The healthier NPA profile, combined with guarantee coverage from CGFMU, encourages banks to allocate more capital to micro‑units, fostering a virtuous cycle of credit creation and economic activity. Looking ahead, sustained policy support and digital onboarding could further accelerate outreach, positioning PMMY as a pivotal engine for inclusive growth in India’s evolving credit ecosystem.