Question map
Pradhan Mantri MUDRA Yojana is aimed at
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] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
- [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 16. MUDRA Bank: > p. 84
- [3] https://www.pib.gov.in/PressReleasePage.aspx?PRID=2119781
- [4] https://www.pib.gov.in/PressReleasePage.aspx?PRID=2119781
PROVENANCE & STUDY PATTERN
Full viewThis 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.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: Does Pradhan Mantri MUDRA Yojana aim to bring small entrepreneurs into the formal financial system
- Statement 2: Does Pradhan Mantri MUDRA Yojana aim to provide loans to poor farmers for cultivating particular crops
- Statement 3: Does Pradhan Mantri MUDRA Yojana aim to provide pensions to old and destitute persons
- Statement 4: Does Pradhan Mantri MUDRA Yojana aim to fund voluntary organizations involved in promoting skill development and employment generation
- 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.
- 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.
- 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.
- Explicitly states PMMY provides loans to small businesses including allied agricultural activities (poultry, dairy, beekeeping).
- Mentions activities other than crop cultivation, indicating the scheme targets micro/small enterprises rather than crop-specific farming.
- Describes PMMY as a scheme to provide loans up to 20 lakh to non-corporate entrepreneurs and micro units.
- Framing PMMY as entrepreneurship/enterprise credit suggests it is not specifically for poor farmers cultivating particular crops.
- Describes PMMY as the Flagship Programme aimed at 'Funding the Unfunded micro enterprises and small businesses'.
- Emphasizes funding micro enterprises rather than targeting loans for specific crop cultivation by poor farmers.
The snippet lists that option (b) 'providing loans to poor farmers for cultivating particular crops' appears as one of several stated aims of Pradhan Mantri MUDRA Yojana in a question-format item.
A student could note this is presented as a multiple-choice distractor and compare with authoritative scheme descriptions to see if it is a correct aim or a wrong option.
Similar to [1], this source reproduces the same multiple‑choice list including the farmers/crops loan option, indicating that such an item has circulated as a question about MUDRA.
Use this pattern (MCQ distractors repeated across texts) to suspect the farmers/crops claim may be a common incorrect option and then check scheme details.
Gives the explicit functional description of MUDRA: set up to provide low‑rate refinance to MFIs/NBFCs and to enable credit to MSMEs, listing small manufacturing, service units, vendors, artisans, etc., but not farmers or crop cultivation.
A student can extend this by comparing MUDRA's beneficiary list to typical farmer-targeted programmes to infer whether crop loans fit MUDRA's mandate.
States MUDRA's purpose as providing funding to the non-corporate small business sector, emphasizing micro and small enterprises rather than agricultural crop loans.
Combine this with knowledge of what 'non-corporate small business sector' usually includes to assess if crop-specific farm loans are likely within MUDRA's scope.
Lists separate agricultural credit measures (Kisan Credit Cards, agricultural loan moratorium, interest subvention) aimed at farmers, implying dedicated farmer credit channels exist outside MUDRA.
A student could use this to hypothesize that crop cultivation loans would be handled by agriculture-specific schemes rather than MUDRA, and then verify scheme mandates.
- Explicitly describes PMMY as 'aimed at Funding the Unfunded micro enterprises and small businesses' — focus is entrepreneurship/credit, not pensions.
- Frames PMMY as a flagship programme to expand financial inclusion for micro-enterprises, indicating its objective is lending/support for businesses.
- States PMMY 'has sanctioned over 52 crore loans' and 'offering institutional credit to non-corporate, non-farm micro and small enterprises' — shows PMMY provides loans, not pensions.
- Highlights micro-entrepreneurship (salons, mechanic shops, mobile repair businesses) as beneficiaries, consistent with a credit/entrepreneurship scheme.
- Describes implementation: 'PMMY loans are being extended by all Public and Private Sector Commercial Banks, Regional Rural Banks... Micro Finance Institutions and Non-Banking Finance Companies' — confirms loan-centric design.
- Discussion of awareness, loan application forms and credit camps further indicates an emphasis on loan delivery, not pension provision.
Defines MUDRA Bank as set up (under Pradhan Mantri MUDRA Yojana) to provide low‑rate loans and refinance to MFIs/NBFCs for credit to MSMEs and lists eligible borrowers (shopkeepers, artisans, vendors).
A student can extend this by noting MUDRA's explicit loan/credit focus (micro‑enterprise finance) and therefore judge that pension provision is not its stated function.
Presents a multiple‑choice list of aims attributed to Pradhan Mantri MUDRA Yojana, including 'bringing small entrepreneurs into formal financial system' and (as one option) 'providing pensions to old and destitute persons' — i.e., shows pension is presented as a possible option to assess.
A student can use this to recognize that authoritative lists place entrepreneurship/credit as a primary aim; combined with other descriptions one can suspect the pension option is a distractor.
Contains the same MCQ options as [1], repeating the pension option alongside credit/inclusion aims for MUDRA, indicating exam sources treat these as alternative choices rather than confirming pensions as MUDRA's aim.
A student might compare this MCQ framing with independent descriptions of MUDRA to see which option matches the scheme's primary activities.
Describes separate government pension schemes (PM‑SYM, National Pension Scheme for Traders) with explicit pension mechanics, showing that pensions are delivered via dedicated schemes.
A student can infer that pensions are typically provided through named pension schemes, so unless MUDRA is described similarly, it is unlikely to be a pension provider.
Lists other PM schemes (PMJDY, PMSBY) that target financial inclusion and insurance/pension access, illustrating that different social objectives (credit, insurance, pensions) are addressed by distinct schemes.
A student can use this pattern — distinct schemes for credit vs pensions — to test whether MUDRA fits the pension role or the credit role by checking its stated activities.
- Explicitly describes PMMY as offering institutional credit to non-corporate, non-farm micro and small enterprises.
- This focus on micro and small enterprises indicates the scheme targets entrepreneurs/businesses rather than voluntary organizations for skill development.
- Describes how PMMY loans are extended through banks, RRBs, cooperative banks, MFIs and NBFCs — a lending-to-business model.
- The implementation description supports that PMMY channels credit to micro-enterprises via financial institutions, not to voluntary skill-development organizations.
- Labels PMMY as 'Funding the unfunded' and a scheme for funding millions who run small businesses in the informal sector.
- This characterization emphasizes support to small business operators rather than voluntary organizations for skill or employment promotion.
Defines MUDRA Bank's purpose and lists eligible borrowers (small manufacturing units, service units, shopkeepers, vendors, artisans, etc.), implying MUDRA targets micro-enterprises rather than voluntary organisations.
A student could compare this beneficiary list with the concept of 'voluntary organisations' and infer whether such organisations fit MUDRA’s stated borrower types.
States the Pradhan Mantri Mudra Yojana provides funding to the non-corporate small business sector, indicating the scheme’s focus on business credit.
Using the generic definition of 'non-corporate small business sector' (e.g., sole proprietors, micro-enterprises), a student could assess whether voluntary organisations are normally included in that category.
Presents a multiple-choice item listing 'funding the voluntary organizations involved in the promotion of skill development and employment generation' as one option about MUDRA’s aims, showing this idea is circulated as a possible—but not affirmed—purpose.
A student could treat this as an indicator the claim has been proposed in questions and therefore should be checked against official beneficiary lists or scheme objectives.
Repeats the same MCQ options (including the voluntary-organisation option), reinforcing that this attribution has appeared in exam-style materials but not confirming it.
A student could use this repetition to prioritize verifying the option by cross-checking with scheme descriptions (e.g., beneficiary lists or implementing agency mandates).
Lists separate government skilling initiatives (PMKVY, SANKALP, NAPS, etc.), implying skill development and employment generation are addressed by distinct programmes.
A student could infer that skill-promotion funding is more likely channeled through these specialised schemes rather than MUDRA, and thus seek official mandate texts to confirm.
- [THE VERDICT]: Sitter. Major scheme launched in 2015, asked in 2016. Covered in India Year Book, Economic Survey, and all standard Economy notes (Singhania/Singh).
- [THE CONCEPTUAL TRIGGER]: Financial Inclusion and the 'Missing Middle' problem in Indian MSME credit (moving informal sector to formal credit).
- [THE HORIZONTAL EXPANSION]: Memorise the 3 loan tiers: Shishu (up to ₹50k), Kishore (₹50k-₹5L), Tarun (₹5L-₹10L). Contrast with 'Stand-Up India' (SC/ST/Women, ₹10L-₹1Cr) and 'PM SVANidhi' (Street Vendors). Note that MUDRA provides *refinance* to intermediaries, not direct lending.
- [THE STRATEGIC METACOGNITION]: Distractors are not random; they are objectives of *other* ministries. Option B is Agriculture (KCC), Option C is Social Justice (NSAP), Option D is Skill Development (NSDC). Always segregate schemes by 'Target Beneficiary' (Farmer vs Entrepreneur vs Destitute) to defeat these swaps.
Multiple references state PMMY/MUDRA’s purpose is to fund non-corporate/informal small business units (shopkeepers, artisans, vendors), which addresses the statement directly.
High-yield for UPSC questions on financial inclusion and MSME support—understanding the objective clarifies policy intent vs other schemes. Connects to topics on MSME policy, credit delivery, and rural-urban livelihoods. Prepare by memorising scheme objectives, target beneficiaries, and scope; practise comparing similar schemes.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 16. MUDRA Bank: > p. 84
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > Recent Government Initiatives for Promotion of MSME Sector > p. 395
Evidence explains MUDRA provides refinance to MFIs/NBFCs/Banks who then lend to small entrepreneurs, showing how informal units access formal finance.
Important for questions on implementation design—distinguishes direct lending vs channelled finance. Links to banking structure, NBFCs, and financial inclusion strategy. Study implementation mechanisms, stakeholder roles, and flow of funds for answer precision.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 16. MUDRA Bank: > p. 84
References place PMMY among government credit initiatives for MSMEs and in the broader financial inclusion context alongside schemes like PMJDY.
Useful for synthesis questions comparing schemes; shows how targeted credit (PMMY) complements account-based inclusion (PMJDY). Master by mapping scheme objectives, beneficiaries, and complementarities; enables comparative and policy-evaluation answers.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > Recent Government Initiatives for Promotion of MSME Sector > p. 395
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > Recent Major Initiatives to Improve Financial Inclusion Are > p. 239
References describe MUDRA as a scheme to fund non-corporate small business sector and list eligible borrowers (micro units, shopkeepers, vendors, artisans), not crop-specific farmers.
High-yield for UPSC because questions often ask to match schemes to target groups; understanding MUDRA's focus on micro-enterprises helps eliminate confusions with agricultural schemes. Prepare by memorising scheme objectives, typical beneficiary lists, and implementation agencies.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > Recent Government Initiatives for Promotion of MSME Sector > p. 395
Evidence includes MUDRA's small-business focus and separate schemes for crop insurance (PMFBY) and irrigation (PMKSY), highlighting different aims for farmer support versus micro-enterprise credit.
Useful for UPSC because many MCQs/analytical questions test ability to differentiate overlapping-sounding schemes. Learn by grouping central schemes by sector (finance, agriculture, insurance) and by beneficiary (farmers vs MSMEs).
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.14 Pradhan Mantri FasalBima Yojana (PMFBY) > p. 321
- INDIA PEOPLE AND ECONOMY, TEXTBOOK IN GEOGRAPHY FOR CLASS XII (NCERT 2025 ed.) > Chapter 4: Water Resources > Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) > p. 44
Reference explains MUDRA Bank provides low-rate refinance to MFIs and NBFCs, which then extend credit to MSMEs and micro units.
Important for questions on scheme architecture and delivery mechanisms; knowing implementation channels (refinance → MFIs/NBFCs → beneficiaries) helps answer 'how' and 'why' type questions. Revise by mapping schemes to implementing agencies and flow of funds.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
References describe MUDRA/MUDRA Bank as a credit facility aimed at micro‑units, small entrepreneurs and MSMEs — directly relevant to judging whether it is a pension scheme.
UPSC frequently asks the purpose, target group and instruments of flagship schemes. Knowing MUDRA's loan/credit focus (who can borrow, scope and year of creation) helps distinguish it from social security schemes and avoids conflating objectives. Prepare by tabulating each flagship scheme's objective, beneficiaries and benefit type (credit vs cash/pension/insurance).
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
MUDRA was initially set up as a wholly-owned subsidiary of SIDBI. While MUDRA sets the rules, the actual lending is done by Banks, NBFCs, and MFIs (Last Mile Financiers). The 'Next Logical Question' often targets the funding source or the parent entity (SIDBI).
Decode the acronym. MUDRA = **Micro Units** Development. 'Micro Units' implies business enterprises. 'Farmers' (Option B) are distinct in policy language (Kisan). 'Destitute' (Option C) implies welfare/pension, not development. 'Voluntary Orgs' (Option D) implies NGOs. Only Option A mentions 'Entrepreneurs', which aligns linguistically with 'Micro Units'.
Connects to GS-3 (Inclusive Growth & Employment). MUDRA addresses the 'informal' nature of India's economy (where ~90% of the workforce is informal) by formalising credit access, aiming to shift subsistence-level self-employment into surplus-generating micro-enterprises.