MSMEs in Bihar, UP, Odisha, N-E availing more Mudra loans, shows SBI report

The magnitude of positive impact is larger on minorities

The Pradhan Mantri Mudra Yojana (PMMY), which extends loan to small and medium enterprises, has seen a notable shift in loan disbursement over the past 10 years, with rising focus on states with historically lower financial inclusion, a report by State Bank of India has said.

The SBI report on ten years of PMMY said that the share of MUDRA loans in Bihar, Uttar Pradesh, Odisha, and the North-east has grown significantly, indicating a more inclusive credit distribution pattern.

Bihar’s share of PMMY loans has risen from 5.67 percent in FY16 to 10.97 percent in FY25, nearly doubling in a decade. Uttar Pradesh too has witnessed a rise from 9.27 percent to 11.30 percent, while Odisha’s share in PMMY loans has climbed from 4.24 percent to 4.51 percent. The North-east, which had traditionally seen lower credit penetration, also recorded a steady rise in loan disbursement.

The SBI report has attributed this shift to targeted policy interventions, aimed at financially under-served states, which has helped easier access to micro-credit for small businesses and entrepreneurs. "The growing share of PMMY loans in these states signifies a move towards addressing regional financial disparities," said the report.

This transformation is part of a broader impact, with PMMY sanctioning over Rs 33 lakh crore in loans to micro and small enterprises in the last 10 years. The report noted that the average loan ticket size has grown from Rs 38,000 in FY16 to Rs 1.02 lakh in FY25, reflecting a growing scale and expansion of small businesses, supported by the scheme.

Maharashtra, Tamil Nadu, and Karnataka continue to receive substantial MUDRA loans, said the report, but also highlighted that the policy focus is increasingly on states where financial inclusion had previously lagged.

The expansion of digital lending platforms such as ‘PSB Loans in 59 Minutes’ and ‘UdyamiMitra’ has further helped bridge the credit gap in these regions. Additionally, the introduction of the Unified Lending Interface (ULI) is expected to enhance access to formal credit in these states.

Despite the growth, challenges remain in the form of infrastructure bottlenecks, lack of financial awareness and skill development gaps, the report has cautioned, suggesting that continued efforts in capacity building and market linkages will be essential to ensure benefits of PMMY extend beyond credit access to sustained economic growth.