RBI warns of NPA spike in MUDRA loans

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RBI warns of NPA spike in MUDRA loans:UPSC

The Reserve Bank of India (RBI) has raised a red flag over spike in non—peforming assets (NPAs) under the government’s flagship scheme to support micro enterprises in the country — the Pradhan Mantri Mudra Yojana.

Key Facts:

  • RBI has cautioned that the scheme might turn out to be the next big source of NPAs that have plagued the banking system.
  • RBI said that bad loansunder PMMY had risen to ₹11,000 crore.
  • The caution comes at a time when the country’s financial system is reeling under severe stress due to IL&FS crisis.

About Pradhan Mantri Mudra Yojana:

  • The Union Budget presented in FY 2015-16, announced the formation of Micro Units Development & Refinance Agency Ltd (MUDRA) Bank.
  •  MUDRA is responsible for developing and refinancing all Micro-enterprises sector by supporting the finance Institutions which are in the business of lending to micro / small business entities engaged in manufacturing, trading and service
    activities.
  •  MUDRA has been formed with primary objective of developing the micro enterprise sector in the country by extending various supports including financial support in the form of refinance, so as to achieve the goal of funding the unfunded.

Source:The Hindu

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