Micro
Units Development and Refinance Agency Bank (or MUDRA Bank), a public sector
financial institution of India is launched by Prime Minister Narendra Modi on 8th
April 2015 under the Pradhan Mantri Jan Dhan Yojana for funding the unfunded
small entrepreneurs.
The Main
Objectives of Mudra
Bank are, to encourage entrepreneurs and small business units to expand their
capabilities and operations, to reduce over indebtedness and to provide formal
system of credit (finance). Agriculture & Self-employment will be the focus
areas of MUDRA Bank.
Reason for establishing Mudra Bank?
MFIs do not meet the funding requirements of
small entrepreneurs who want more than Rs.50,000 and up to a few lakhs.
Commercial banks, too, are reluctant to have business relationships with this
segment of borrowers. There are 57.7 million small business units and only 4%
of them are able to access institutional finance. How does one solve the
funding gap?
This very reason led to the establishment of MUDRA
Bank.
MUDRA Bank in Detail
v MUDRA targets
young, educated or skilled workers and entrepreneurs including /women
entrepreneurs
There are about 5.77 crore small business
units. MUDRA Bank lays down "responsible financing practices" to ward
off over indebtedness and ensure proper client protection principles and
methods of recovery, besides development of standardized set of covenants
governing last mile lending to micro enterprises.
"Providing access to institutional
finance to such micro/small business units/enterprises will not only help in
improving the quality of life of these entrepreneurs but also turn them into
strong instruments of GDP growth and employment generation," the Finance
Ministry said in a statement.
v MUDRA Bank to have
a corpus of Rs 20,000 crore
In his Budget speech, Finance Minister Arun
Jaitley had proposed the MUDRA Bank will have a corpus of Rs 20,000 crore, and
credit guarantee corpus of Rs 3,000 crore.
The Bank will nurture small businesses
through different stages of growth and development of businesses termed as
Shishu, Kishor and Tarun.
ü Shishu: This is the first step when the business is starting up. The loan
cover in this stage will be upto Rs 50,000.
ü Kishor: In this stage, the entrepreneur will be eligible for a loan
ranging from Rs 50,000 to Rs 5 lakh.
ü Tarun: This last and final category will provide loans for upto Rs 10
lakh.
v The roles envisaged
for MUDRA include the following:
ü Laying down policy guidelines for
micro enterprise financing business.
ü Registration of MFI entities.
ü Accreditation /rating of MFI
entities.
ü Laying down responsible financing
practices to ward off over indebtedness and ensure proper client protection
principles and methods of recovery.
ü Development of standardized set
of covenants governing last mile lending to micro enterprises.
ü Promoting right technology
solutions for the last mile.
ü Formulating and running a Credit
Guarantee scheme for providing guarantees to the loans/portfolios which are
being extended to micro enterprises.
ü Support development &
promotional activities in the sector.
ü Creating a good architecture of
Last Mile Credit Delivery to micro businesses under the scheme of Pradhan
Mantri MUDRA Yojana.
ü MUDRA would also partner with
state/regional level coordinators to provide finance to "Last Mile
Financiers" of small/micro business enterprises.
v Beauty parlours,
hawkers to be covered by MUDRA Bank
Businesses/entrepreneurs/units
covered by the MUDRA Bank would include proprietorship/partnership firms such
as small manufacturing units, shopkeepers, fruits/vegetable sellers, hair
cutting saloon, beauty parlours, transporters, truck operators, hawkers,
co-operatives or body of individuals, food service units, repair shops, machine
operators, small industries, artisans, food processors, self help groups,
professionals and service providers etc. in rural and urban areas with
financing requirements up to Rs 10 lakh.
v Credit Plus
Approach
MUDRA will
also take up other initiatives such as supporting financial literacy, creating
a framework for “Small Business Finance Entities” where it will work with
credit bureaus and rating agencies among others.
Comments
Post a Comment