Question

Which of the following statements are true about Pradhan Mantri Mudra Yojana (PMMY) ?
(A) Launched in April 2014
(B) Grant loans of up to Rs. 10 lakhs for income-generating manufacturing, trading, and service sectors
(C) The term loan and working capital requirements can be met
(D) The rate of interest is decided by the state governments
(E) There is no insistence on collateral(s) during the sanction of the loan

• A. (B), (C) and (E) only.
• B. (A), (B) and (D) only.
• C. (A), (B), (C) and (D).
• D. (B), (C) and (D) only.

Hint:

Mudra stands for 'Micro Units Development and Refinance Agency'. All Mudra loans are protected under the Credit Guarantee Fund for Micro Units (CGFMU), which allows them to be collateral-free.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
The Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme launched by the Government of India to provide credit access to micro-enterprises.
The scheme supports the non-corporate, non-farm small and micro-enterprise sector.

Step 2: Detailed Explanation:
Let us analyze the correctness of each statement regarding PMMY:
- Statement (A): PMMY was launched on April 8, 2015, not 2014. (False)
- Statement (B): The scheme provides loans up to Rs $10 \text{ Lakhs}$ under three categories: Shishu (up to Rs 50,000), Kishore (Rs 50,000 to Rs 5 Lakhs), and Tarun (Rs 5 Lakhs to Rs 10 Lakhs) for income-generating activities in manufacturing, trading, and services. (True)
- Statement (C): These Mudra loans can be used to fund both long-term capital assets (term loans) and day-to-day operations (working capital). (True)
- Statement (D): The rate of interest is not decided by the state governments. Instead, it is determined by the lending banks, NBFCs, or Microfinance Institutions based on RBI guidelines and the borrower's credit profile. (False)
- Statement (E): A defining feature of Mudra loans is that they are collateral-free, meaning banks cannot demand collateral security during sanctioning. (True)
Therefore, statements (B), (C), and (E) are correct.

Step 3: Final Answer:
The correct option is (B), (C), and (E) only, corresponding to option (A).