Evaluating the Role of MUDRA Bank in Shaping Business Operations: An Empirical Study of MSMEs in Lucknow district

Abstract

 The Pradhan Mantri MUDRA Yojana was instituted to foster financial inclusion by providing accessible credit to micro, small, and medium enterprises (MSMEs). Evaluating both its operational milestones and structural bottlenecks is essential to maximizing its regional economic efficacy. This study examines the operational achievements, and institutional barriers encountered by MSME beneficiaries following the implementation of the MUDRA scheme in the Lucknow district. The research utilizes an empirical approach, analyzing primary survey data collected from MSME respondents across the study area to evaluate internal management practices, credit accessibility, and external market vulnerabilities. The findings indicate that the MUDRA scheme serves as a powerful socio-economic driver, significantly reducing financial constraints, generating rural employment, mitigating household poverty, and fostering women’s empowerment. However, severe institutional bottlenecks persist, characterized by extensive delays in loan sanctions, prolonged timelines for working capital limit approvals, political interference, and the restrictive presence of invisible cartels. Internally, a substantial share of enterprises face management challenges, including poor collection rates, involuntary expenditures, and post-COVID-19 market uncertainties. While the MUDRA Yojana successfully expands credit access and drives regional development, its long-term sustainable impact relies heavily on streamlining institutional bank authorization processes, eliminating bureaucratic delays, and training entrepreneurs to optimize resource utilization against volatile market trends.