| Abstract | Abstract
Financial inclusion is a key driver of inclusive economic growth, particularly in developing
economies where micro and small enterprises (MSEs) form the backbone of employment
and income generation. The Pradhan Mantri MUDRA Yojana (PMMY) was launched in
2015 to provide collateral-free institutional credit to non-corporate, non-farm small and
micro enterprises that traditionally lacked access to formal financial services. By
categorizing loans under Shishu, Kishor, and Tarun, the scheme aims to address varying
financial needs across stages of business development. This study examines the effectiveness
of PMMY in enhancing financial inclusion among micro and small enterprises in India. It
evaluates improvements in access to formal banking services, reduction in dependence on
informal credit sources, and changes in borrowing behavior after availing PMMY loans. The
research also explores regional and sectoral variations in financial inclusion outcomes. Using
a mixed-method approach combining primary survey data and secondary financial statistics,
the study seeks to provide empirical evidence on the role of PMMY in strengthening India’s
MSME ecosystem.
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