Union Finance Minister Nirmala Sitharaman has asked banks to strengthen financial literacy efforts among beneficiaries of the Pradhan Mantri MUDRA Yojana.
She made the remarks during an interaction with MUDRA beneficiaries on Thursday. The minister said greater financial awareness can help small entrepreneurs use credit effectively and expand their businesses.
Sitharaman also asked banks that provide MUDRA loans to conduct financial literacy programmes across states. The move is aimed at helping more entrepreneurs understand formal financial services and access credit.
Focus on Small Entrepreneurs
The Finance Minister’s comments came after an entrepreneur from Nagaland highlighted the need for greater financial literacy among small businesses.
The entrepreneur said her network was working across more than 10 districts. Its efforts focus on helping people understand financial services and access formal credit.
Sitharaman said banks should also take responsibility for improving financial awareness among MUDRA borrowers. She stressed that better understanding of banking services can support business expansion.
Timely Loan Repayment Can Build Credit History
Sitharaman also highlighted the importance of timely repayment of MUDRA loans.
Regular repayment can help borrowers establish a credit record. A stronger credit history can gradually help successful entrepreneurs access larger loans and other banking facilities.
The minister said MUDRA borrowers can eventually graduate to regular business banking as their enterprises grow. This can provide additional opportunities for businesses that successfully expand their operations.
MUDRA Provides Collateral-Free Credit
The Finance Minister highlighted the design of the MUDRA scheme during the interaction.
The Pradhan Mantri MUDRA Yojana was launched in 2015 to provide collateral-free institutional credit to small entrepreneurs. It aims to help people who may not have assets to offer as security for loans.
According to the Finance Ministry, 59.14 crore loans worth Rs 41.71 lakh crore had been sanctioned under PM MUDRA as of June 30, 2026.
Link with Financial Inclusion
Sitharaman also recalled the role of the Pradhan Mantri Jan Dhan Yojana in expanding access to formal banking.
The scheme was launched in 2014 to bring people into the formal banking system. It has supported wider access to bank accounts and financial services.
As of September 9, 2026, PMJDY had recorded 59.26 crore beneficiaries, according to the Department of Financial Services.
MUDRA followed this broader financial inclusion effort by focusing on credit access for small entrepreneurs.
Beneficiaries Share Business Experiences
Several MUDRA beneficiaries shared their experiences during the interaction with the Finance Minister.
An entrepreneur from Karnataka said his loan had increased from Rs 1 lakh to Rs 5 lakh as his business expanded. He currently employs three people and plans to establish a larger factory.
A printing business owner from West Bengal also shared her experience. She rebuilt her business after pandemic-related losses and now employs eight people. She said she plans to purchase a digital machine to expand her operations.
These experiences highlighted the role of formal credit in supporting small businesses at different stages of growth.
Banks Asked to Expand Outreach
Sitharaman’s call places greater emphasis on financial education alongside credit access.
MUDRA beneficiaries need to understand loan terms, repayment requirements and available banking services. Better financial awareness can help entrepreneurs make informed decisions as their businesses develop.
The Finance Minister therefore urged lending banks to extend financial literacy efforts across states. The objective is also to bring more eligible entrepreneurs into the formal credit system.
Supporting the Growth of Small Businesses
The latest direction comes as small businesses continue to form an important part of India’s economic activity.
For MUDRA beneficiaries, access to credit is only one part of business growth. Understanding how to manage loans and build a banking relationship can also affect their ability to expand.
Sitharaman’s emphasis on financial literacy seeks to connect these two aspects. Banks would play a role in helping borrowers understand financial products while supporting them through the different stages of business development.
The focus on financial literacy also reflects the wider objective of connecting more small entrepreneurs with formal banking and credit services.