MUDRA loan numbers – Biggest jumla by the Finance Minister

In a recent interview with the press in the industrial town of South India, Coimbatore, the Finance Minister clarified to Mr Sundarraman, a reporter from The Indian Express, that according to the bank’s data available to her (which she cross-checked on her tablet), 49.5 crore MUDRA loans have been given across the country, amounting to Rs. 29.76 lakh crores.

The reporter questioned her regarding the data for Tamil Nadu, which she had shared in a meeting the day before. He asked, “Madam, you said that in Coimbatore, 20 lakh people have been given MUDRA loans, and the amount disbursed is Rs. 13,180 crore. The population of Coimbatore is only 34 lakhs; how is it possible that 20 lakh people out of 34 lakh could have availed of a loan?”

The Finance Minister reiterated that it was bank data and that in Tamil Nadu, 5.6 crore people have been given MUDRA loans amounting to Rs. 3 lakh crores. In Coimbatore alone, 20 lakh people were given loans. The population of Tamil Nadu is 8.39 crores, and Coimbatore’s is 30.8 lakhs (Estimate for 2024). Does this mean that 67% of the population, including those aged 0-18 and above 60, have been given a MUDRA loan? On average, 26% of the population in India is between the ages of 0-14, and 7% is above 65 years old (and ineligible for any loan). So, has everyone aged 19-65 been given a MUDRA loan? Where are these enterprises? Every little space would have to be filled by enterprises.

Is this not a big Jumla? Who are you cheating, Finance Minister? You are either ignorant or misleading the people of India. If 5.6 crore MUDRA loans have been given, there wouldn’t be space to walk in Tamil Nadu as the entire space would be occupied by businesses. Some people explain that this could be due to second loans being given to the same beneficiaries. However, this does not match up.

The lead bank of the state which is IOB does not provide the data for MUDRA loans .

The MUDRA website provides year-wise data on the number of loans given and the total amount. When totalled, the number of loan accounts comes to 47,84,48,671 by March 2024, and by June 25, 2024, it is 49,60,73,788 accounts. This is probably what the Finance Minister is quoting, but it is wrong. Banks should report the number of MUDRA loans outstanding as of March-end along with the balance outstanding. By totalling you have multiplied the number of loans. (This anomaly has been pointed out in earlier articles on November 30, 2019 and April 18, 2023).

As per the Ministry of Statistics, Government of India, in 2023, there are 29.42 crore households in India. If 49 crore MUDRA loans had been disbursed, every household would have received 1.6 loans. Is that even possible? Where are all these business enterprises?

According to RBI data as of March 2024, there are only 1,46,36,395 loan accounts under industries, 2,66,61,312 under retail trade, and 1,00,57,776 under professional services. The total number of loan accounts across all categories, including agriculture, SME, personal, housing, and bill discounting, is only 40.31 crores. How can there be 49 crore MUDRA loan accounts? Can’t the Finance Ministry verify this?

The MUDRA loans are covered under the credit guarantee scheme, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). In 2023, only 11,65,786 accounts were approved under CGTMSE, while 6,23,10,598 MUDRA loans were disbursed in 2022-23. Why are most loans not covered under CGTMSE? According to the MUDRA website, 1,02,53,017 applications were received in 2024, but only 49,74,852 loans were disbursed.

So it is clear that the data quoted by the President of India in the parliament, the Prime Minister and the Finance Minister could not be true.

The minimum requirement is an apology from all three and publishing bank-wise, district-wise, State state-wise MUDRA Loan data with year-wise sanction, disbursal, outstanding and number of accounts closed and written off. 

If the figures given by the Finance Minister are true, this could be the largest transfer of public money to the supporters of the political party in power. It could lead to the collapse of the banking system and also affect the large number of youths who have taken these loans and defaulted, whose CIBIL score will be affected and they can’t avail of another loan ever.

The scheme itself is faulty, as the maximum number of loans given is under the Shishu category (77.6%), with amounts below Rs. 50,000, which is not enough for most micro-enterprises. Why banks are not utilizing the CGTMSE scheme needs to be analyzed. Are we creating zombies?

Will journalists, economists, bankers, and politicians take a closer look to bring out the truth? Will the RBI provide the facts?