Mudra loans by NBFCs grew faster than banks in last fiscal

MUMBAI: Non-banking financial companies (NBFCs) still have a long way to go to achieve the scale of commercial banks in Mudra loans, but they’re growing swiftly in sanctioning these small loans for businesses, official data showed.

According to the 2017-18 annual report of Pradhan Mantri Mudra Yojana (PMMY), though NBFCs sanctioned only over ₹27,000 crore of Mudra loans in FY18 against ₹92,492.68 crore by state-run banks, their year-onyear growth was faster. While NBFC Mudra loan sanctions increased ₹21,562.63 crore from a year ago, banks could raise their Mudra loans by only ₹20,539.01 crore in the same period.

Impressively, NBFCs not only met their Mudra target of ₹9,050 crore for FY18, but also their sanctions for the year saw a fivefold jump from the previous year.

PMMY is a scheme launched in April 2015 for providing loans up to ₹10 lakh to non-corporate, nonfarm small/micro enterprises. These advances are classified as Mudra loans and given by commercial banks, regional rural banks (RRBs), small finance banks, cooperative banks, micro finance institutions (MFIs) and NBFCs.

The data showed that lenders overall have classified ₹2.44 trillion loans under PMMY, a growth of 41% y-o-y.

The other category of lenders—small finance banks—has also seen robust growth at 183% y-o-y to ₹19,022.89 crore. AU Small Finance Bank was the top institution among SFBs with a sanction amount of ₹4,614.4 crore to 117,000 borrowers.

Among state-run banks, State Bank of India (SBI) with ₹28,791 crore sanctions to 1.41 million accounts came first. It was followed by Canara Bank and Punjab National Bank with ₹7,665 crore and ₹6,838 crore, respectively.

While NBFCs were facing a liquidity crunch after defaults by IL&FS and the subsequent investor reluctance, experts believe that lending under the PMMY scheme will largely remain unaffected.