RBI blames banks for Mudra loan defaults; bankers say can't help

Banks, according to the RBI, did not follow adequate credit appraisals, did not ensure the end-use of funds, or monitor the loans

The Reserve Bank of India (RBI) has held banks’ poor credit appraisal responsible for their high bad debts arising out of Mudra (Micro Units Development and Refinance Agency) loans, according to sources.

RBI Governor Shaktikanta Das  also discussed the issue in a meeting with public sector bank (PSB) chiefs on Friday. 

Bad debts for Mudra loans have spiked for PSBs, and, at the end of 2018-19 (FY19), stand at 9.3 per cent of advances. Loans under the Pradhan Mantri Mudra Yojana (PMMY) were Rs 3.22 trillion in FY19, according to the PMMY website.

So far in 2019-20, loans disbursed under