Which of the following statements is NOT correct for Pradhan Mantri Mudra Yojana (PMMY)?

Correct — B, It grants loans of up to ₹15 lakhs for income generating manufacturing, trading and services sectors. No stage of the scheme has ever used a fifteen lakh ceiling. When Pradhan Mantri Mudra Yojana was launched the three slabs were Shishu up to fifty thousand rupees, Kishore from fifty thousand to five lakh and Tarun from five lakh to ten lakh, so ten lakh was the cap throughout the period this paper covers; the Union Budget presented on 23 July 2024, weeks before the examination, announced a doubling of the top slab to twenty lakh. Fifteen lakh matches neither the old ceiling nor the new one. Candidates should also know that option (c) is not a true statement about the scheme either — Mudra loans are given as term loans, working capital loans or composite loans, and the Mudra card is a working capital product — so this item as printed has two options that fail the test, and the printed figure in (b) is the crisper error.

• (a)It was launched in 2015 — This is correct. The scheme was launched on 8 April 2015, with the Micro Units Development and Refinance Agency set up as a subsidiary of the Small Industries Development Bank of India to refinance the lending banks.
• (c)Under this scheme only the term loan requirements can be met and not the working capital requirements — This is not a clean distractor. Mudra lending covers working capital as well as term loans, and the Mudra card is a card-based working capital facility, so a candidate who marked this option has read the scheme correctly. The item as printed carries two false statements.
• (d)There is no insistence on collateral for the sanction of loan — This is correct. Loans under the scheme are collateral-free, and guarantee cover is provided instead through a credit guarantee arrangement.

Pradhan Mantri Mudra Yojana lends to non-corporate, non-farm micro and small enterprises through banks, non-banking financial companies and microfinance institutions. The Micro Units Development and Refinance Agency does not lend directly to borrowers; it refinances the institutions that do. Loans are collateral-free, and the slabs are graded so that the smallest borrowers, in the Shishu category, take the great majority of accounts while a much smaller number of larger loans account for a large part of the money disbursed.

The item is best attacked by the number. Three of the four options are qualitative statements about design, and only one carries a figure, so a candidate who remembers the ten lakh ceiling can answer without weighing the rest. The wider lesson is worth taking: scheme ceilings move, and this one moved in the same year as the examination, so a question set before a Budget can be overtaken by it. As of the 2024 examination the ceiling stood at ten lakh; the twenty lakh limit for the enlarged top slab was announced in the Budget of July 2024 and operationalised later that year.

• The scheme was launched on 8 April 2015.
• Its slabs were Shishu up to ₹50,000, Kishore ₹50,000 to ₹5 lakh and Tarun ₹5 lakh to ₹10 lakh.
• The Union Budget of July 2024 announced raising the top slab to ₹20 lakh.
• Loans are collateral-free and cover term loan, working capital and composite requirements.
• The Micro Units Development and Refinance Agency is a subsidiary of the Small Industries Development Bank of India and refinances rather than lends directly.

• Assuming the Micro Units Development and Refinance Agency lends directly to borrowers.
• Carrying a revised ceiling back into a question set before the revision, or the reverse.
• Reading a collateral-free loan as a guarantee-free loan; the guarantee is provided separately.

A which-is-not-correct item on a flagship scheme, where the intended error is a single figure — though this one carries a second faulty option as well.

• practice — not a real PYQ

  Under Pradhan Mantri Mudra Yojana, the Kishore category covers loans of

  • (a)Up to ₹50,000
  • (b)₹50,000 to ₹5 lakh
  • (c)₹5 lakh to ₹10 lakh
  • (d)₹10 lakh to ₹20 lakh

  Answer(b) ₹50,000 to ₹5 lakh — Shishu is the slab below it and Tarun the slab above.

• practice — not a real PYQ

  The Micro Units Development and Refinance Agency was set up as a subsidiary of

  • (a)The Reserve Bank of India
  • (b)The National Bank for Agriculture and Rural Development
  • (c)The Small Industries Development Bank of India
  • (d)The State Bank of India

  Answer(c) The Small Industries Development Bank of India — it refinances lenders rather than lending directly.