Union Finance Minister Nirmala Sitharaman on Thursday asked banks providing loans under the PM MUDRA Yojana to step up financial literacy efforts across states to help small entrepreneurs expand their businesses and bring more people under the scheme.
Speaking during an interaction with beneficiaries of the PM MUDRA Yojana, FM Sitharaman said financial awareness was important for entrepreneurs to make better use of credit and grow their businesses.
Her remarks came after an entrepreneur from Nagaland highlighted the need for greater financial literacy among small businesses. The entrepreneur said her network had been working across more than 10 districts to help people understand financial services and access credit.
FM Sitharaman said banks providing MUDRA loans should also be asked to undertake financial literacy efforts in every state, according to the interaction.
The minister also highlighted how timely repayment of MUDRA loans can help beneficiaries build a credit record and gradually gain access to larger loans and regular banking facilities.
She said the scheme was designed to provide credit without requiring collateral, allowing small entrepreneurs who may not have assets to offer as security to access formal finance.
“Now you are getting that opportunity, you are growing in it, and by graduating from it, you are able to get facilities from the bank like a regular business,” FM Sitharaman said.
She also recalled the role of the Pradhan Mantri Jan Dhan Yojana, launched in 2014, in bringing people into the formal banking system through accounts without a minimum balance requirement. The MUDRA scheme followed in 2015 to provide collateral-free credit to small entrepreneurs.
During the interaction, several beneficiaries shared how they had used MUDRA loans to start or expand businesses and were seeking larger loans for further growth.
An entrepreneur from Karnataka said his loan had increased from Rs 1 lakh to Rs 5 lakh as his business expanded. He currently employs three people and said he wanted to establish a larger factory.
A printing business owner from West Bengal said she rebuilt her business after suffering losses during the pandemic and now employs eight people. She said she was looking to purchase a digital machine to expand operations.
FM Sitharaman said the experiences of beneficiaries showed how small businesses could grow through access to formal credit and repayment discipline.
“We had trust in the design of that scheme. There was trust in the people,” she said.
The minister also said small businesses were gaining an important place in the economy as entrepreneurs expanded their operations and reached customers in wider markets.
(ANI)
