Pradhan Mantri Mudra Yojana | Mudra Scheme | Mudra Yojana | PMMY

Posted by aliyas on April 26th, 2017

                        Pradhan Mantri Mudra Yojana

The Prime Minister Narendra Modi launched the Micro Units Development and Refinance Agency Ltd. (MUDRA)—a Bank on 8 April in New Delhi. In the budget for Financial Year 2015-16 creation of a Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs.20,000 crore, and credit guarantee corpus of Rs.3,000 crore.

MUDRA, to be set up through a statutory enactment. Since the enactment for MUDRA is likely to take some time, it is proposed to initiate MUDRA as a unit of SIDBI to benefit from SIDBI’s initiatives and expertise.

It would be responsible for developing and refinancing through a Pradhan Mantri MUDRA Yojana, all Micro-finance Institutions (MFIs) which are in the business of lending to micro/small business entities engaged in manufacturing, trading and service activities.

MUDRA would also partner with State/Regional level coordinators to provide finance to Last Mile Financiers of small/micro business enterprises.

Further, the approach goes beyond credit only approach and offers a credit–plus solution for these enterprises spread across the country.

Roles Envisaged for MUDRA

Laying down policy guidelines for micro enterprise financing business

Registration of MFI entities

Accreditation /rating of MFI entities

Laying down responsible financing practices to ward off over indebtedness and ensure proper client protection principles and methods of recovery

Development of standardised set of covenants governing last mile lending to micro enterprises

Promoting right technology solutions for the last mile

Formulating and running a Credit Guarantee scheme for providing guarantees to the loans/ portfolios which are being extended to micro enterprises

Support development and promotional activities in the sector

Pradhan Mantri Mudra Yojana

Creating a good architecture of Last Mile Credit Delivery to micro  businesses under the scheme of Pradhan Mantri MUDRA Yojana

These measures to be taken up by MUDRA are targeted towards mainstreaming young, educated or skilled workers and entrepreneurs including women entrepreneurs. According to the NSSO Survey of 2013, there are some 5.77 crore small business units, mostly individual proprietorship, which run manufacturing, trading or services activities. These encompass myriad of small manufacturing units, shopkeepers, fruits/vegetable vendors, truck & taxi operators, food-service units, repair shops, machine operators, small industries, artisans, food processors, street vendors and many others. Most of these Own Account Anterprises (OAE) are owned by people belonging to Scheduled Caste, Scheduled Tribe or Other Backward Classes.

The biggest bottleneck in the growth of entrepreneurship in this sector is the lack of financial support. A vast part of the non-corporate sector operates as unregistered enterprises and formal or institutional architecture has not been able to reach out to meet its financial requirements. 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 primary product of MUDRA will be refinance for lending to micro businesses/units under the aegis of the Pradhan Mantri MUDRA Yojana. The initial products and schemes under this umbrella have already been created and the interventions have been named Shishu, Kishor and Tarun to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur.

Shishu: Covering loans up to Rs. 50,000

Kishor: Covering loans above Rs. 50,000 and up to Rs. 5 lakh

Tarun: Covering loans above Rs. 5 lakh and up to Rs. 10 lakh

Businesses/entrepreneurs/units covered would include proprietorship/partnership firms running 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.

MUDRA would also adopt a credit plus approach and take up interventions for development support across the entire spectrum of beneficiary segments.

Other proposed offerings such as MUDRA Card, Portfolio Credit Guarantee and Credit Enhancement are also envisaged.

MUDRA will build on experiences of some of the existing players who have demonstrated ability to cater to the Non Corporate Small Business segment to build a financing architecture and right ecosystem for both the entrepreneurs as well as the last mile financiers to the segment. Access to finance in conjunction with rational price is going to be the unique customer value proposition of MUDRA. The establishment of MUDRA would not only help in increasing access of finance to the unbanked but also bring down the cost of finance from the Last Mile Financiers to the informal micro/small enterprises sector. The approach goes beyond credit only approach and offers a credit–plus solution for these myriad micro enterprises, creating a complete ecosystem spread across the country.

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