Mudra loans: Women get more accounts, less credit: Since its launch in April 2015, the Pradhan Mantri Mudra Yojana has disbursed more than ₹40 lakh crore through nearly 58 crore loan accounts. Women account for a majority of these loans. The distribution of the money, however, tells a different story.
According to figures published in the Ministry of Statistics and Programme Implementation’s Women and Men in India 2025 report, women held 37.07 crore of the 55.39 crore Mudra accounts as of October 31, 2025, or 67% of the total. Yet the ₹15.40 lakh crore disbursed to these accounts represented just 43% of the overall ₹36.18 lakh crore. The average disbursement per account was ₹41,539 for women, compared with ₹1.13 lakh for other borrowers.
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Women have gained access to institutional credit in large numbers, but the loans they receive are considerably smaller.
Financial inclusion is often measured by the number of bank accounts opened or loans sanctioned. These figures show the reach of a programme, though they reveal little about whether borrowers receive enough capital to build viable businesses. On that measure, Mudra’s record deserves closer examination.
Mudra is a credit delivery framework rather than a government-funded cash transfer programme. Public and private sector banks, regional rural banks, small finance banks, non-banking financial companies and microfinance institutions provide the loans. The Micro Units Development and Refinance Agency supports the lending ecosystem through refinancing, while a separate credit guarantee mechanism helps lenders manage risk. Lending decisions remain with individual institutions.
Small loans dominate Mudra lending
The distribution of loans by size offers some explanation for the disparity. Mudra was originally designed around three categories: Shishu, covering loans up to ₹50,000; Kishor, from above ₹50,000 to ₹5 lakh; and Tarun, from above ₹5 lakh to ₹10 lakh. In October 2024, the government introduced Tarun Plus, allowing loans of up to ₹20 lakh for entrepreneurs who had successfully repaid an earlier Tarun loan.
According to official figures released in April 2026, Shishu accounted for 74% of Mudra loans but only 32% of the amount sanctioned. Kishor represented 24% of accounts and 43% of sanctioned funds, while Tarun accounted for 2% of loans and 25% of the amount. Tarun Plus had barely taken off, representing just 0.004% of loan accounts.
Mudra has therefore been particularly effective at providing entry-level credit. Its record in financing business expansion is less clear. A ₹30,000 loan may help a street vendor purchase inventory or a home-based entrepreneur acquire basic equipment. It is unlikely to finance substantial investment in machinery or the addition of several employees.
The predominance of small loans does not, by itself, indicate failure. Many microenterprises require modest working capital, and a small formal loan may be preferable to expensive informal borrowing. The more relevant test is whether businesses that need larger loans can obtain them as they grow.
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Women receive less credit across most states
The gender disparity is visible across much of the country. Women held a majority of Mudra accounts in 23 of the 36 states and Union Territories, but received a majority of disbursed funds in only five: Odisha, Bihar, Tamil Nadu, Jharkhand and Puducherry.
Delhi presents a particularly sharp contrast. Women held 58% of Mudra accounts in the national capital but received only 20.7% of the amount disbursed. Odisha and Bihar performed better, with women receiving 57.6% and 57.2% of disbursements, respectively.
There is also a geographical concentration of lending. Tamil Nadu, Bihar, West Bengal, Karnataka and Maharashtra together accounted for 53% of the money disbursed to women. These states have substantial networks of small enterprises and informal businesses. But their dominance raises questions about the scheme’s reach in regions where women face greater difficulty accessing institutional finance.
Differences in the size and nature of enterprises may explain part of the variation. Women are more likely to operate small, home-based businesses with limited capital requirements. Differences in asset ownership, access to business networks and household responsibilities may also restrict the scale of their operations. Lenders’ assessment of credit risk could play a role, although the aggregate figures do not establish whether women face discriminatory lending practices.
The smaller average loan size is therefore evidence of unequal credit distribution, though it cannot establish unequal treatment of otherwise comparable borrowers. That distinction is important when assessing the scheme’s performance.
From financial inclusion to business growth
Mudra finances working capital and term loans for enterprises engaged in manufacturing, trading and services, including allied agricultural activities such as dairy, poultry and beekeeping.
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Official figures show that about 21% of Mudra loan accounts in FY2024-25 belonged to new entrepreneurs. Nearly half of the loans have gone to borrowers from Scheduled Caste, Scheduled Tribe and Other Backward Class communities. The programme has consequently extended formal credit to groups traditionally underserved by conventional banking.
Many beneficiaries have limited collateral, thin credit histories and little business experience. Their enterprises may also be vulnerable to economic disruptions and fluctuations in demand. These circumstances help explain why lenders favour smaller exposures, particularly when borrowers have yet to establish a repayment record.
But they also make it important to examine whether Mudra borrowers can move from smaller loans to larger ones. The scheme’s four lending categories provide for such progression. What remains unclear is how frequently it happens, particularly among women.
The success of Mudra should increasingly be judged by what its loans enable borrowers to achieve. Has a small shop become a larger business? Has a home-based enterprise acquired machinery and hired workers? How many first-time women entrepreneurs have graduated from a ₹30,000 loan to financing of several lakh rupees?
Answering these questions requires more than aggregate figures on sanctions and disbursements. Data on repeat borrowing, movement between loan categories, business survival and employment generation would provide a fuller picture of the programme’s contribution to entrepreneurship.
Mudra has demonstrated that institutional credit can reach millions of borrowers who were previously underserved. Its next test is whether those borrowers, especially women, can obtain the capital needed to expand. Without evidence of business progression, the number of loans issued will remain an incomplete measure of financial inclusion.