FM Sitharaman asks banks to step up financial literacy efforts for MUDRA beneficiaries

On Thursday, Union Finance Minister Nirmala Sitharaman urged banks offering loans under the PM MUDRA Yojana to intensify their financial literacy efforts across the country, aiming to assist small entrepreneurs in expanding their businesses and enrolling more people in the scheme. During an interaction with MUDRA beneficiaries, Sitharaman emphasized the significance of financial awareness for entrepreneurs to utilize credit more effectively and expand their businesses.

This call for action followed an entrepreneur from Nagaland who shared the need for greater financial literacy among small businesses, as her network had been working in more than 10 districts to educate people about financial services and access to credit. Sitharaman stated that banks providing MUDRA loans should also undertake financial literacy initiatives in every state, according to the interaction.

Sitharaman highlighted the importance of timely repayment of MUDRA loans in helping beneficiaries build a credit record and eventually gain access to larger loans and regular banking facilities. She explained that the scheme was designed to provide credit without requiring collateral, enabling small entrepreneurs who may not have assets to offer as security to access formal finance.

During the interaction, several beneficiaries shared their experiences of using MUDRA loans to start or expand their businesses, with aspirations of obtaining larger loans for further growth. An entrepreneur from Karnataka mentioned that his loan had grown from Rs 1 lakh to Rs 5 lakh as his business expanded, currently employing three people and aiming to establish a larger factory.

A printing business owner from West Bengal recounted rebuilding her business after pandemic losses and now employing eight people, seeking to purchase a digital machine to expand her operations.

Sitharaman highlighted the success stories of beneficiaries, demonstrating how small businesses could flourish through access to formal credit and repayment discipline. She expressed trust in the scheme's design and the people's ability to succeed. Sitharaman also noted that small businesses were playing an increasingly vital role in the economy as entrepreneurs expanded their operations and reached customers across broader markets.