Pradhan Mantri MUDRA Yojana, launched April 8, 2015, provides collateral-free loans up to ₹10 lakh to micro-enterprises through Micro Units Development and Refinance Agency. Three categories: Shishu (up to ₹50,000), Kishor (₹50,001-₹5 lakh), Tarun (₹5,00,001-₹10 lakh). By March 2024, over 40 crore loans sanctioned worth ₹23 lakh crore. Covers manufacturing, trading, services sectors. Aims to formalize micro-credit, reduce dependence on informal lenders, promote entrepreneurship among SC/ST, women, minorities.

MUDRA addresses India's micro-credit gap where traditional banks hesitate to lend to micro-enterprises due to high transaction costs and perceived risks. The scheme refinances lending institutions (banks, NBFCs, MFIs) rather than direct lending, leveraging existing financial infrastructure. MUDRA cards function like credit cards for business purposes, enabling repeat borrowing. The initiative recognizes that 95% of Indian enterprises are micro-units employing over 11 crore people. By providing institutional credit access, it aims to reduce exploitation by informal moneylenders charging 24-36% interest. The scheme supports the government's financial inclusion agenda and formalization of the economy. Women constitute 68% of MUDRA beneficiaries, indicating its role in gender-inclusive growth. Regional focus on northeastern states and priority sector lending compliance makes it crucial for balanced development. The scheme's success lies in its simplicity - no collateral, minimal documentation, and flexibility in loan utilization across manufacturing, trading, and service sectors.