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SBI sees 53% spike in Mudra loan exposure in FY23


State Bank of India (SBI), the country’s largest bank, increased its Mudra loan exposure by more than 53% to Rs 37,925 crore in FY23. Despite mounting NPAs, which account for about one-fifth of outstanding Mudra loans, this is the highest growth rate seen by the state-owned bank in the last five years.

This enormous increase in loan growth has contributed to a fall in gross NPAs, which has dropped from 23.70% in 2021-22 to 16.17% in 2022-23. In absolute terms, gross NPAs increased from Rs 5,889 crore in 2021-22 to Rs 6,133 crore in 2022-23.

The Pradhan Mantri Mudra Yojana (PMMY) Mudra loan is a business financing initiative that provides loans of up to Rs. 10 lakh to small, non-corporate, and non-farm firms.

The Mudra plan, which was launched in 2015, consists of three main loan categories. The Shishu category includes loans up to Rs 50,000, the Kishor category includes loans between Rs 50,000 and Rs 5 lakh, and the Tarun category includes loans between Rs 5 lakh and Rs 10 lakh.


Despite being backed by the Micro Units Development and Refinance Agency (MUDRA), a government-owned NBFC that promotes the expansion of the micro-enterprise sector, banks receive little refinancing assistance. Banks lend money directly from their balance sheets.

The PSBs’ aggressiveness is a significant disadvantage of the scheme. Initially, the government set targets for banks, including regional sub-targets. However, PSBs face their own set of issues, including insufficient credit appraisal and a lack of proper monitoring.

Mudra exposure does not represent a concern to banks’ balance sheets due to considerable diversity in their lending portfolios. What is troubling is that the NPAs have yet to fall into the single digits.