Hello and welcome to exampundit. Today we are sharing all about the MUDRA Bank and MUDRA Yojana launched by our Union Government. This article covers the purpose, features, functions and all the other important information on PM MUDRA Yojana and MUDRA Bank.
Pradhan Mantri MUDRA Yojana
The Pradhan Mantri MUDRA Yojana
(PMMY) is a scheme launched by the Union Government on April 8, 2015 for
providing loans upto ₹ 10
lakh to the non-corporate, non-farm small/micro enterprises.
(PMMY) is a scheme launched by the Union Government on April 8, 2015 for
providing loans upto ₹ 10
lakh to the non-corporate, non-farm small/micro enterprises.
Under PMMY, all banks viz. Public
Sector banks, Private Sector Banks, Regional Rural Banks (RRBs), State
Co-operative Banks, Urban Co-operative Banks, Foreign Banks and Non-Banking
Finance Companies (NBFCs)/Micro Finance Institutions (MFIs) – are required to
lend to non-farm sector income generating activities below ₹10 lakh.
Sector banks, Private Sector Banks, Regional Rural Banks (RRBs), State
Co-operative Banks, Urban Co-operative Banks, Foreign Banks and Non-Banking
Finance Companies (NBFCs)/Micro Finance Institutions (MFIs) – are required to
lend to non-farm sector income generating activities below ₹10 lakh.
These loans are classified as
MUDRA loans under PMMY.
MUDRA loans under PMMY.
PMMY was announced through Union
Budget 2015-16, which proposed to create
MUDRA bank with a corpus of ₹ 20,000 crore made available
from the shortfalls of priority sector lending, to refinance Micro-Finance
Institutions through Pradhan Mantri Mudra Yojana.
Budget 2015-16, which proposed to create
MUDRA bank with a corpus of ₹ 20,000 crore made available
from the shortfalls of priority sector lending, to refinance Micro-Finance
Institutions through Pradhan Mantri Mudra Yojana.
Further, budget supported a credit guarantee corpus of ₹3,000 crore for
guaranteeing loans being provided to the micro enterprises.
guaranteeing loans being provided to the micro enterprises.
The purpose of PMMY is to provide funding to the non-corporate small
business sector. Non- Corporate Small Business Segment (NCSBS) consists of
millions of proprietorship/ partnership firms running as small manufacturing
units, service sector units, shopkeepers, fruits/ vegetable vendors, truck
operators, food-service units, repair shops, machine operators, small
industries, artisans, food processors and others, in rural and urban areas.
business sector. Non- Corporate Small Business Segment (NCSBS) consists of
millions of proprietorship/ partnership firms running as small manufacturing
units, service sector units, shopkeepers, fruits/ vegetable vendors, truck
operators, food-service units, repair shops, machine operators, small
industries, artisans, food processors and others, in rural and urban areas.
One of the biggest hurdles to the
growth of entrepreneurship in the Non-Corporate Small Business Sector (NCSBS)
is lack of financial support to this sector and a vast majority belonging to
this sector do not have access to formal sources of finance.
growth of entrepreneurship in the Non-Corporate Small Business Sector (NCSBS)
is lack of financial support to this sector and a vast majority belonging to
this sector do not have access to formal sources of finance.
Loan offerings under PMMY
Under the aegis of PMMY, the
MUDRA has already created its initial set of products/ schemes. The interventions have been named ‘Shishu’
(meaning infant), ‘Kishor’ (meaning
child) and ‘Tarun’ (meaning
adolescent) to signify the state of growth/development and funding needs of the
beneficiary micro unit/entrepreneur and also provide a reference point for the
next phase of graduation / growth to look forward to:
MUDRA has already created its initial set of products/ schemes. The interventions have been named ‘Shishu’
(meaning infant), ‘Kishor’ (meaning
child) and ‘Tarun’ (meaning
adolescent) to signify the state of growth/development and funding needs of the
beneficiary micro unit/entrepreneur and also provide a reference point for the
next phase of graduation / growth to look forward to:
- Shishu: covering loans upto ₹
50,000/- provided with no collateral, @1% rate of interest/month repayable over
a period of 5 years - Kishor: covering loans above ₹50,000/-
and upto ₹ 5 lakh - Tarun: covering loans above
₹ 5 lakh to ₹ 10 lakh
Approach of PMMY
A minimum of 60% of support would flow to enterprises in the smallest
segment. Partner intermediaries of MUDRA Bank have to endeavor to adhere to
the following broad framework :
segment. Partner intermediaries of MUDRA Bank have to endeavor to adhere to
the following broad framework :
First time entrepreneurs, youth entrepreneurs (i.e. entrepreneurs
aged up to 30 years) and women entrepreneurs shall be encouraged and special
schemes shall be designed for such entrepreneurs,
aged up to 30 years) and women entrepreneurs shall be encouraged and special
schemes shall be designed for such entrepreneurs,
Emphasis shall be on cash flow
based lending and not security based lending. Collateral securities, etc. shall
be avoided.
based lending and not security based lending. Collateral securities, etc. shall
be avoided.
Repayment obligations shall be
flexible and shall be framed keeping in view the business cash flows of the
entrepreneur.
flexible and shall be framed keeping in view the business cash flows of the
entrepreneur.
Micro Units Development Refinance Agency (MUDRA) Bank
Micro Units Development Refinance
Agency (MUDRA) Bank is a refinance institution for micro-finance institutions.
As on date, MUDRA is conceived not only as a refinance institution and but also
as a regulator for the micro finance institutions (MFIs).
Agency (MUDRA) Bank is a refinance institution for micro-finance institutions.
As on date, MUDRA is conceived not only as a refinance institution and but also
as a regulator for the micro finance institutions (MFIs).
Key Persons:
- Kshatrapati Shivaji – Chairman of MUDRA Bank
- Pankaj Jain – Government Nominee Director
The MUDRA Bank is primarily be responsible for –
- Laying down
policy guidelines for micro/small enterprise financing business - Registration
of MFI entities - Regulation of
MFI entities - Accreditation
/rating of MFI entities - Laying down
responsible financing practices to ward off indebtedness and ensure proper
client protection principles and methods of recovery - Development of
standardized set of covenants governing last mile lending to micro/small
enterprises - Promoting
right technology solutions for the last mile - Formulating
and running a Credit Guarantee scheme for providing guarantees to the loans
which are being extended to micro enterprises - Creating a
good architecture of Last Mile Credit Delivery to micro businesses under the
scheme of Pradhan Mantri Mudra Yojana.
Government has decided to provide
an additional fund of ₹1
trillion (US$15 billion) to the market and will be allocated as
an additional fund of ₹1
trillion (US$15 billion) to the market and will be allocated as
- 40% to shishu
- 35% to kishor
- 25% to Tarun
Those eligible to borrow from MUDRA bank are
- small manufacturing units,
- service sector units,
- shopkeepers,
- fruits/ vegetable vendors,
- truck operators,
- food-service units,
- repair shops,
- machine operators,
- small industries,
- artisans,
- food processors
MUDRA Card is an innovative product which provides working capital facility as a cash credit
arrangement. MUDRA Card is a debit card issued against the MUDRA loan
account, for working capital portion of the loan. The borrower can make use of
MUDRA Card in multiple withdrawal and credit, so as to manage the working
capital limit in a most efficient manner and keep the interest burden minimum.
MUDRA Card will also help in digitalization of MUDRA transactions and creating
credit history for the borrower.
arrangement. MUDRA Card is a debit card issued against the MUDRA loan
account, for working capital portion of the loan. The borrower can make use of
MUDRA Card in multiple withdrawal and credit, so as to manage the working
capital limit in a most efficient manner and keep the interest burden minimum.
MUDRA Card will also help in digitalization of MUDRA transactions and creating
credit history for the borrower.
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