Banking News

Mudra loans: Banks told to alert customers on frauds related to Mudra loans


The government has asked banks to keep vigil and inform their customers of fraud in Mudra loans. The directive follows multiple instances of frauds related to Mudra loans which have come to light. There have been reports of several unsuspecting small loan seekers getting duped by fraudsters impersonating as facilitators of Mudra loans.

Banks have been told to freeze the accounts of such firms or individuals who are reported to have committed such fraud and initiate action with the local authorities concerned, said a government official, who did not wish to be identified. “Also, all necessary action needs to be taken to protect the interests of borrowers, including helping them get their money recovered,” he said.

Lenders have been further advised to spread awareness by holding campaigns. “We have asked lenders to display suitable advisory materials in their branches and through other means,” said the official.

Banks Told to Alert Customers on Frauds Related to Mudra Loans.

As per the latest available data, under Mudra loans till March 24, around ₹23.2 lakh crore has been sanctioned in 408.2 million loan accounts. About 68% of accounts under the scheme belong to women entrepreneurs, and 51% of accounts belong to entrepreneurs in the scheduled caste, scheduled tribe and other backward class categories.

“This scheme has gained good popularity among small-scale entrepreneurs, and on the pretext of faster approvals or lower interest rates, fraudsters dupe such unsuspecting borrowers,” a bank executive said on condition of anonymity, noting that most recently a case came to light where 12 women in a self-help group were duped of ₹12 lakh using the same modus operandi.

“While banks could help with the awareness programme, it is also up to borrowers to stay vigilant.”

Earlier this year, on the eighth anniversary of the Mudra scheme, finance minister Nirmala Sitharaman said the scheme has helped in the generation of large-scale employment opportunities at the grassroots level and has also proved a game changer while boosting the Indian economy.

“This demonstrates that easy availability of credit to the budding entrepreneurs of the country has led to innovation and sustained increase in per capita income,” she had said.

Last year, the government said that non-performing assets (NPAs) relating to Mudra loans stood at just 3.17% of the credit disbursed, as of March 2022.


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