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PM launches MUDRA Bank, to fund 5.8 crore Small Businesses

PM launches MUDRA Bank, to fund 5.8 crore Small Businesses

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download (6)Prime Minister Narendra Modi launched the MUDRA (Micro Units Development and Refinance Agency) Bank here on Wednesday. This bank will provide loans of up to Rs. 10 Lakh to small entrepreneurs  including shopkeepers and beauty parlour owners, hoping that it will promote growth and create jobs.

This is the first key implementation of proposals made in the budget for fiscal year 2015-16. It was proposed to set up a refinance institution with a corpus of Rs. 20,000 crore, and credit guarantee corpus of Rs. 3,000 crore. Initially, it would be a subsidiary of SIDBI but later it would be converted into a full-fledged institution to be set up through a statutory enactment.

The PM said, “We need to increase employment opportunities in the nation as Big industrial houses provide jobs to only 1.25 crore people, while small entrepreneurs employ 12 crore people”

The Prime Minister expressed concern over the problems faced by farmers due to abnormal weather over the past year. “Helping the farmer in this time of distress is our responsibility, and therefore, the Government had sent teams of Central Ministers to affected areas, to assess the extent of damage,” Mr. Modi said, according to an official release. He also have the assurance that the Centre and State Governments, the banks and insurance companies would all do their utmost to provide relief to the farmers.

Finance minister Arun Jaitley said that “Mudra bank will benefit around 5.77 crore small business enterprises and this step is taken towards funding the unfunded.

mudraThis plan 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 and small business entities engaged in manufacturing, trading and service activities.

It would also partner with state/ regional level coordinators to provide finance to last mile financiers of small/ micro business enterprises. Further, it would go beyond a credit-only approach and offer a credit-plus solution for these enterprises spread across the country. India Post network with presence of 154000 points spread across villages will be used for increasing access to formal financial system.

It would lay down policy guidelines for micro enterprise financing business besides registration of MFI entitities. It would also lay down responsible financing practices to ward off over-indebtedness and ensure proper client protection principles and methods of recovery. It would develop a standardised set of covenants governing last mile lending to micro enterprises.

It will formulate and run a credit guarantee scheme for providing guarantees to loans/ portfolios being extended to micro enterprises.

These measures are targeted towards mainstreaming young, educated or skilled workers and entrepreneurs including women entrepreneurs.

 

 

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