Reserve Bank Deputy Governor M.K. Jain on Tuesday raised concerns over the growing NPA levels in Mudra loans and asked banks to monitor these loans closely.
The Mudra loan scheme was launched by Prime Minister Narendra Modi in 2015 to help the highly under-funded small and medium industries with cheap bank loans.
"Mudra is a case in point... while such a massive push would have lifted many beneficiaries out of poverty, there has been some concerns about the growing level of non-performing assets among these borrowers," Mr. Jain said at Sidbi event on microfinance.
He said banks need to focus on repayment capacity at the appraisal stage itself and monitor loans through the life cycle much more closely.
Also read: PM Mudra loans created 5.1 million new entrepreneurs, 11.2 million new jobs
Also read: Only 20% Mudra loans utilised to start new businesses