What is MUDRA? MUDRA, Micro Units Development & Refinance Agency Ltd, is a financial institution set up by Govt. of India for development and refinancing micro units enterprises. Announced by the Hon’ble Finance Minister while presenting the Union Budget for FY 2016, the primary purpose of MUDRA is to provide funding to the non-corporate small business sector through various Last Mile Financial Institutions like Banks, NBFCs and MFIs. Pending enactment of an act for MUDRA Bank, a Non-Banking Finance Company as MUDRA Ltd has been set up as a 100% subsidiary of SIDBI.

What is the purpose of MUDRA?

The purpose of MUDRA is to provide funding to the non-corporate (informal sector) small business sector such as small manufacturing units, shopkeepers, fruits and vegetable sellers, hair salons, beauty parlors, truck operators, hawkers, artisans in rural and urban areas with financing requirements of up to Rs 10 lakhs. Non–Corporate Small Business Sector (NCSB) is lacking financial support to this sector and 90% of this sector does not have access to formal sources of finance. MUDRA is thus set up to cater to the needs of the NCSB segment or the informal sector for bringing them in the mainstream.

What are the roles and responsibilities of MUDRA? MUDRA would be responsible for refinancing all Last Mile Financiers such as Non-Banking Finance Companies, Societies, Trusts, Section 8 Companies [formerly Section 25], Co-operative Societies, Small Banks, Scheduled Commercial Banks and Regional Rural Banks which are in the business of lending to micro/small business entities engaged in manufacturing, trading and services activities. MUDRA would also partner with State/Regional level financial intermediaries to provide finance to Last Mile Financier of small/micro business enterprises.

What are the offerings of MUDRA?
MUDRA loans are available in three categories.

• For a small businesses, loans up to Rs. 50,000/- is available under the ‘Shishu’ category,


• Beyond Rs. 50,000 and up to Rs. 5 lakhs under the ‘Kishor’ category and
  
• Between Rs. 5 lakhs to Rs. 10 lakhs under the 'Tarun' category.

These products have been designed to cater to the customers operating at the lower end of the enterprise spectrum. Till 31st March 2019, 19 crore people have availed MUDRA loan and 3.12 lakh crore loans have been disbursed.

What kind of borrowers are eligible for assistance from MUDRA? Non–Corporate Small Business Segment (NCSB) comprising of millions of proprietorship / partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits / vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.

DID YOU KNOW? – Highlights of MUDRA

• MUDRA will be extending refinance support to RRBs for enhancing their liquidity.


• MUDRA operates a special refinance scheme for women entrepreneurs; viz; Mahila Uddyami Scheme. Assistance will be provided under all three groups, viz. ‘Shishu’, ‘Kishor’ as well as ‘Tarun’.


• Pradhan Mantri Mudra Yojana (PMMY) loans will be extended by all Public Sector Banks such as PSU banks, Regional Rural Banks (RRBs), Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions and Non-Banking Finance Company.


• Monitoring of PMMY progress at the State level will be done through the State Level Bankers Committee (SLBC) forum and at the National level by MUDRA/Department of Financial Services, Government of India. For this purpose, MUDRA has developed a portal, wherein the banks and other lending institutions directly feed their achievement details which are consolidated by the system and reports are generated for review.


• Any Indian Citizen who has a business plan for a non-farm income-generating activity such as manufacturing, processing, trading or service sector whose credit need is less than 10 lakh can approach either a Bank, MFI or NBFC for availing of loans under PMMY. The usual terms and conditions of the lending agency may have to be followed for availing of loans under PMMY. The lending rates are as per the RBI guidelines issued in this regard from time to time.


• There is no subsidy for the loan given under PMMY. However, if the loan proposal is linked to some Government scheme, wherein the Govt. if providing a capital subsidy, it will be eligible under PMMY also.


• MUDRA Card is an innovative credit product wherein the borrower can avail of credit in a hassle-free and flexible manner. It will provide a facility of working capital arrangement in the form of CC/OD to the borrower. Since MUDRA Card will be a RuPay debit card, it can be used for drawing cash from ATM or Business Correspondent or make a purchase using Point of Sale (POS) machine. The facility is also there to repay the amount, as and when, surplus cash is available, thereby reducing the interest cost.


• For Shishu loans, normally 7 to 10 days is the turn around time for processing the loan proposals on receipt of complete information.