Why ULIP mis-selling has become rampant ?

Despite the havoc wreaked by the Covid-19 pandemic, loans worth Rs 2,32,594 crore have been sanctioned under the Pradhan Mantri Mudra Yojana (PMMY) as on February 19, 2021, according to a report in The Hindu BusinessLine.

Of the sanctioned loans, Rs 2,19,107 crore has already been disbursed. The figures are likely to match the disbursal numbers of last fiscal.

In the last fiscal, loans worth Rs 2.77 lakh crore were sanctioned under the scheme as of February 20, 2020.

Provisional data shows that 3,68,15,467 loans were sanctioned as of February 26, 2021. During FY2019-20, the total sanctions under PMMY have grown to Rs 3.37 lakh crore, exceeding the target set at 3.25 lakh crore and benefiting 6.22 crore beneficiaries.

In 2015-16, the government announced the PMMY to ensure access to credit for small firms, boost entrepreneurship and promote financial inclusion.

Mudra loans come in three categories. The scheme provides collateral-free loans of up to Rs 50,000 under Shishu scheme, between Rs 50,000 to Rs 5 lakh under the Kishore scheme and between Rs 5 lakh to Rs 10 lakh under Tarun scheme.

Small business loans sanctioned under Mudra have exceeded the goal set for the last fiscal at Rs 3,37,495 crore.

“Given the fact that banking operations and business were impacted for a significant period of almost two quarters, the present performance of Mudra loans is certainly beyond initial expectations,” a senior official of Union Bank of India told the publication.

Job loss in urban areas are believed to be the reason for the steady demand in petty business loans.

“Some of the people are now setting up small business to make a living and PMJY is facilitating this,” said a senior SBI official.

However, bankers are guarded over the quantum of NPAs under Mudra loans in the current fiscal. A clear picture will emerge only at the end of the current fiscal, say bankers.

NPAs in 2019-20 were at 4.8% of the total loans disbursed, according to government data.