Mudra Bank launched to help small business

It will act as regulator and decide on policies for micro enterprise financing

GN Bureau | April 8, 2015


#Mudra   #bank   #micro business   #finance minister   #Arun Jaitley  

Prime minister Narendra Modi on Wednesday launched Mudra Bank, which will provide credit of up to Rs 10 lakh to small entrepreneurs and act as a regulator for 'micro-finance institutions' (MFIs).

The Micro Units Development Refinance Agency  or the Mudra Bank comes under  Pradhan Mantri Jan Dhan Yojana  and it will frame policy guidelines for micro enterprise financing business and registration of MFI entities as well as their accreditation and rating. It will also lay down "responsible financing practices" to ward off over indebtedness and ensure proper client protection principles and methods of recovery, besides development of standardised set of covenants governing last mile lending to micro enterprises.

There are about 5.77 crore small business units. These units find it difficult to access credit from the regular banking system.  This is where Mudra comes in.

The Bank will nurture small businesses through different stages of growth and development of businesses termed as Shishu, Kishor and Tarun.

Shishu: This is the first step when the business is just starting up. The loan cover in this stage will be up to Rs 50,000.  Kishor: In this stage business, the entreprenuer will be eligible for a loan ranging from Rs 50,000 to Rs 5 lakh.  Tarun: This last stage of growth envisages loans for upto Rs 10 lakh.

In his budget speech, finance minister Arun Jaitley had proposed the Mudra Bank with a corpus of Rs 20,000 crore, and credit guarantee corpus of Rs 3,000 crore.

"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.

Comments

 

Other News

`BMC health budget doubled but PHC vacancies rose thrice`

While there has been a rise of 98% in BMC’s health budget in the last seven years, from Rs 3,637 crore in 2018-19 to Rs 7,191 crore in 2024-25, vacancies in BMC Primary Healthcare Facilities (dispensaries) have increased by three times in the last decade. Praja Foundation’s &lsqu

India’s export ambitions: where do we go from here?

India’s Trade Scenario India’s trade has increased from 17% of GDP during 1991 to 46% of GDP during 20231 owing to the liberalization reforms which led to the gradual easing of restrictions from a highly protected and controlled economy; fostering competition,

PM Modi congratulates "my friend" Trump

As the results of the tightly contested US Presidential elections became clear Wednesday afternoon (India time), prime minister Narendra Modi congratulated Donald Trump on the victory. "Heartiest congratulations my friend @realDonaldTrump on your historic election victory," Modi sa

Cabinet approves scheme for financial support to meritorious students

The union cabinet, chaired by prime minister Narendra Modi, on Wednesday approved PM Vidyalaxmi, a new central sector scheme that seeks to provide financial support to meritorious students so that financial constraints do not prevent anyone from pursuing higher studies. PM Vidyalaxmi is a k

New translation of Tagore’s modern classic speaks to our times

Four Chapters By Rabindranath Tagore Translated from the Bangla by Sekhar Bandyopadhyay and Subhransu Maitra Orient BlackSwan, 120 pages, Rs 515

Veteran journalist explains why 2024 election “surprised” India

2024: The Election That Surprised India By Rajdeep Sardesai HarperCollins, Rs 799.00, 560 pages It has been ba

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter