Mudra Loan NPAs Fall Significantly, Says Finance Minister

Public sector banks have seen a notable drop in non-performing assets for Mudra loans, with the rate falling to 3.4% in fiscal 2024, Finance Minister Nirmala Sitharaman announced in the Lok Sabha on Monday.

This decline marks an improvement from previous fiscals, including 4.77% in 2021, 4.89% in 2020, and 3.76% in 2019.

Sitharaman said that NPAs for Mudra loans in private sector banks have also declined, reaching 0.95% in FY24 from a high of 1.77% in fiscal 2021 and 0.67% in fiscal 2019.

NPAs, which represent loans where payments are overdue for 90 days or more, are a critical indicator of banking sector health.

Interest rates for Mudra loans vary between sectors, with public sector banks charging between 9.15% and 12.80%, while private sector banks range from 6.96% to 28%.

Sitharaman assured that monitoring mechanisms are in place to address any recovery harassment issues.

In addition to public and private sector banks, other financial institutions showed improvements. Regional rural banks' NPAs decreased from 3.86% in 2019 to 2.47% in 2024, while small finance banks and state cooperative banks also reported better figures.

Notably, non-banking financial companies saw NPAs drop from 0.47% in 2019 to 0.22% in 2024.

Overall, the NPAs for Mudra loans have fallen to 2.10%, reflecting positive trends since the scheme's inception in 2015 under the Pradhan Mantri Mudra Yojana, designed to support micro and small enterprises, she said.

(With inputs from PTI)