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The MUDRA (Micro Units Development and Refinance Agency) loans, a vehicle of the Union government to foster grassroots-level entrepreneurship and self-employment in the country, witnessed a sharp drop in demand by 21%, according to figures released on April 8.

Data on MUDRA website shows that in FY21, disbursements stood at Rs 2.65 lakh crore, down from Rs 3.37 lakh crore in FY20. In FY 19, An amount of Rs 3.21 lakh crore was disbursed.

Since its launch in 2015, FY21 is the first year when the loan disbursement has witnessed a dip.

There are three categories of loans under the MUDRA scheme. The smallest one titled “Sishu” entitles one to a loan of Rs 50,000.

The next level of loan is between Rs 50,000 to Rs 5 lakh and is called “Kishore”, the third category called “Tarun” is from Rs 5 lakh to Rs 10 lakh.

The loanee does not need to submit collaterals for these loans. The annual rate of interest varies from 8.2% to 9.65%.

The Pradhan Mantri MUDRA Yojana was launched in 2015. The total disbursement so far has almost touched Rs 15 lakh crore. The number of loans sanctioned till FY21 is about 28.68 crore.

The Union Finance Ministry on April 8 tweeted that 68% of the beneficiaries are women. About 51% of the loans were given to members of Scheduled Castes, Scheduled Tribes and Other Backward Castes. Borrowers from the minority community got about 11% of the loans.

“We are not worried with the dip in disbursement. Considering the lockdown and its impact on small businesses, last year’s disbursement was not bad at all,” said a Union government official on condition of anonymity.

“The impact of the pandemic is clear in the disbursement figure. But we hope that with the growth in the economy in FY22, the disbursements will pick up,” said Rishab Kothari, senior vice-president of MCC Chambers of Commerce.