RBI Dy Governor Red-Flags Rising Stress In Mudra Loans

Bankers have been warned about growing stress in Mudra loans and have been asked to monitor them closely as unsustainable credit growth in the sector can risk the system

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MUMBAI: Reserve Bank deputy governor MK Jain on Tuesday warned bankers about the growing stress in Mudra loans, which has crossed more than Rs 3.21 lakh crore RPT crore system-wide, and asked them to monitor such loans closely as unsustainable credit growth in the sector can risk the system.

Prime Minister Narendra Modi had launched the Mudra scheme in April 2015 with much fanfare to offer speedier credit up to Rs 10 lakh to small businesses which are non-corporate, non-farm small/micro enterprises and which normally do not get bank funds due to their poor and mostly no credit rating. These loans are extended by banks, NBFCs, RRBs, cooperative banks and small finance banks.

Interestingly, it can be recalled that within a year of the launch of the scheme, the then Reserve Bank governor Raghuram Rajan had warned of asset quality troubles bubbling in the scheme but the then finance minister Arun Jaitely had brushed aside the concerns.