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Q73 (IAS/2016) Economy › Schemes, Inclusion & Social Sector › Financial sector schemes Official Key

Pradhan Mantri MUDRA Yojana is aimed at

Result
Your answer: —  ·  Correct: A
Explanation

The correct answer is option A. Micro Units Development and Refinance Agency Bank (MUDRA Bank) was set up in 2015 by the GOI to provide loans at low rates to Micro Finance Institutions (MFIs) and non-banking financial institutions, which then provide credit to MSMEs.[1] The purpose of MUDRA is to provide funding to the non-corporate (informal sector) small business sector such as small manufacturing units, shopkeepers, fruits and vegetable sellers, hair salons, beauty parlours, truck operators, hawkers, artisans in rural and urban areas with financing requirements of up to Rs 10 lakhs.[2] PMMY is aimed at funding the unfunded micro enterprises and small businesses by offering institutional credit to non-corporate,[4] non-farm micro and small[3] enterprises. By providing institutional credit to these informal sector entrepreneurs, the scheme effectively brings them into the formal financial system. The scheme is not about agricultural loans for specific crops (option B), pensions (option C), or funding voluntary organizations (option D).

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
  2. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 16. MUDRA Bank: > p. 84
  3. [3] https://www.pib.gov.in/PressReleasePage.aspx?PRID=2119781
  4. [4] https://www.pib.gov.in/PressReleasePage.aspx?PRID=2119781
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Q. Pradhan Mantri MUDRA Yojana is aimed at [A] bringing the small entrepreneurs into formal financial system [B] providing loans to poor f…
At a glance
Origin: Books + Current Affairs Fairness: Low / Borderline fairness Books / CA: 2.5/10 · 7.5/10
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This is a textbook 'Flagship Scheme' question appearing one year post-launch (2015 launch, 2016 exam). It tests the fundamental definition found in the introductory paragraph of any government notification or standard economy text. If you missed this, you ignored the biggest financial inclusion headline of the year.

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Statement 1
Does Pradhan Mantri MUDRA Yojana aim to bring small entrepreneurs into the formal financial system
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
Presence: 5/5
“Micro Units Development and Refinance Agency Bank (MUDRA Bank) was set up in 2015 by the GOI to provide loans at low rates to Micro Finance Institutions (MFIs) and non-banking financial institutions, which then provide credit to MSMEs. The MUDRA Bank was set up under the Pradhan Mantri MUDRA Yojana scheme. Persons eligible to borrow from MUDRA Bank include: small manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.”
Why this source?
  • Explicitly links MUDRA Bank/PMMY to providing credit to MSMEs and lists small entrepreneurs (shopkeepers, vendors, small manufacturing units) as eligible borrowers.
  • Describes institutional arrangement (MUDRA Bank providing low-rate loans to MFIs/NBFCs) that channels finance to small businesses through formal intermediaries.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 16. MUDRA Bank: > p. 84
Presence: 5/5
“Pending enactment of an act for MUDRA Bank, a Non-Banking Finance Company as MUDRA Ltd has been set up as a subsidiary of SIDBI.• The purpose of MUDRA is to provide funding to the non-corporate (informal sector) small business sector such as small manufacturing units, shopkeepers, fruits and vegetable sellers, hair salons, beauty parlours, truck operators, hawkers, artisans in rural and urban areas with financing requirements of up to Rs 10 lakhs.• MUDRA would be responsible for refinancing all Last Mile Financiers such as Micro Financial Institutions, NBFCs, Societies, Trusts, Companies, Co-operative Societies, SFBs, Scheduled Commercial Banks and RRBs which are in the business of lending to micro/small business entities engaged in manufacturing, trading and services activities (Refinancing means MUDRA loans will be available through Banks/NBFCs/MFIs and not direct lending).• MUDRA loans are available in three categories.”
Why this source?
  • States the purpose of MUDRA is to provide funding to the non-corporate (informal) small business sector such as shopkeepers, hawkers, artisans.
  • Explains refinancing via banks/NBFCs/MFIs (last-mile financiers), indicating integration of informal enterprises with formal financial institutions.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > Recent Government Initiatives for Promotion of MSME Sector > p. 395
Presence: 4/5
“Indian Industry 12.21 • 5. Credit Guarantee Scheme for micro and small enterprises, which includes collateral-free credit facility extended by qualified lending institutions including NBFC to new and existing MSMEs up to ₹200 lakh for borrowing unit. 6. Credit-Linked Capital Subsidy Scheme, which aims at encouraging technology upgradation of the MSME sector. 7. The Pradhan Mantri Mudra Yojana to provide funding to the non-corporate small business sector.”
Why this source?
  • Lists Pradhan Mantri Mudra Yojana among recent government initiatives to provide funding to the non-corporate small business sector.
  • Positions PMMY alongside other MSME-focused credit initiatives, reinforcing its role in formal credit provisioning to small enterprises.
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Statement analysis

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