What is Pradhan Mantri Mudra Bank Loan Yojana?
With the purpose of providing funding to non-corporate small business sectors, Pradhan Mantri Mudra Bank Loan Yojana under the Micro Units Development and Refinance Agency (MUDRA) Bank is a new institution being set up by a government of India for development and refinancing activities relating to micro units. Loans worth about Rs 1 lakh Crore have been sanctioned to small entrepreneurs under the Pradhan Mantri MUDRA Yojana, Prime Minister Narendra Modi said today, emphasizing that the government wants youth to be job creators and not job seekers.
MUDRA Bank has rightly classified the borrowers into three segments: the starters, the mid-stage finance seekers, and the next level growth seekers.
To address the three segments, MUDRA Bank has launched three loan instruments:
- Shishu: covers loans up to Rs 50,000/-
- Kishor: covers loans above Rs 50,000/- and up to Rs 5 lakh
- Tarun: covers loans above Rs 5 lakh and up to Rs 10 lakh
Initially, sector-specific schemes will be confined to “Land Transport, Community, Social & Personal Services, Food Product and Textile Product sectors”. Over a period of time, new schemes will be launched to encompass more sectors.
MUDRA operates as a refinancing institution through State/Regional level intermediaries. It refinances NBFCs/MFIs and also banks, primary lending institutions etc.
Till the date of 7th April, 2016, the Mudra Yojana scheme in the state of Gujarat has served to 9.5 lakh beneficiaries under the ‘Shishu Loans’ category with a loans disbursement worth of Rs 2111 Crore, 85,039 beneficiaries under the ‘Kishore Loans’ category with a loan disbursement worth of Rs 1,843 Crore, and 25,852 beneficiaries have been served under the ‘Tarun Loans’ category with a loans disbursement worth of Rs 1,875 Crore in the last 12 months.
Objectives of Mudra Banks
- Regulate the lender and the borrower of microfinance and bring stability to the microfinance system through regulation and inclusive participation.
- Extend finance and credit support to Microfinance Institutions (MFI) and agencies that lend money to small businesses, retailers, self-help groups, and individuals.
- Register all MFIs and introduce a system of performance rating and accreditation for the first time. This will help last-mile borrowers of finance to evaluate and approach the MFI that meets their requirement best and whose past record is most satisfactory. This will also introduce an element of competitiveness among the MFIs. The ultimate beneficiary will be the borrower.
- Provide structured guidelines for the borrowers to follow to avoid failure of business or take corrective steps in time. MUDRA will help in laying down guidelines or acceptable procedures to be followed by the lenders to recover money in cases of default.
- Develop the standardized covenants that will form the backbone of the last-mile business in future.
- For providing guarantees to loans being offered to micro businesses Offer a Credit Guarantee scheme.
- To assist in the process of efficient lending, borrowing and monitoring of distributed capital, Introduce appropriate technologies.
- Build a suitable framework under the Pradhan Mantri MUDRA Yojana for developing an efficient last-mile credit delivery system to small and micro businesses.
Mudra Loans could be availed for the following:
- Vehicle loan: Commercial vehicle loan, Car loan and Two-wheeler loan
- Business Installment Loan (BIL): Loan for working capital requirement, buying plant and machinery, renovating offices etc.
- Business Loans Group Loans (BLG) and Rural Business Credit (RBC): We offer Dropline overdraft/Overdraft facility/Working capital loans.
Mudra Loan Mela
The government is organizing MUDRA loan melas in different parts of the country. These meals are organised for few days where loans for small business funding could be applied. In the melas, loans are granted ranging from Rs. 50,000 to Rs. 10 lakh.
Eligibility Criteria for Participating Banks and Financial Companies
- Scheduled Commercial Banks
All scheduled commercial Banks in the public and private sector with 3 years of continuous profit track record, net NPAs not exceeding 3%, minimum net worth of Rs.100 cr. and not less than 9% CRAR are eligible to Lend Loan
- Regional Rural Banks –
All restructured RRBs having net NPA within 3% (relaxable in deserving cases), having profitable operations and not carrying any accumulated losses and CRAR >9% are eligible under Pradhan Mantri Mudra Scheme.
MFI, Small Business companies are also eligible if they fulfill the requirement