The country’s formal or institutional architecture was unable to reach out to them and meet their financial requirements. These units were largely self-financed or reliant on either personal networks or moneylenders. With this gap kept in mind, the PMMY was floated with the objective to create an easily accessible bridge between a large unbanked sector and formal lenders. Launched in 2015, PMMY provides collateral-free institutional credit up to ₹10 lakh, as provided by Member Lending Institutions (MLIs): i.e., Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs).
Under the aegis of the PMMY, the Micro Units Development and Refinance Agency (MUDRA) created three sub-schemes…