Mudra Bank Loan Features and Benefits

Micro Units Development and Refinance Agency Ltd., also referred to as MUDRA Bank is an initiative that was announced in the Union Budget of FY 2015-16. The company was registered in March 2015 and became operational from 7 April 2015. Under this scheme, the development of small businesses and entrepreneurs were focused upon. Several exceptions were made in order to satisfy client requirements by reaching areas where general banks were unable to reach.

Advantages and Objectives of MUDRA Bank

Almost half the population of the nation lives in remote areas, where banking services such as savings accounts, credit cards, loans, and other such benefits are unheard of. The main motive of MUDRA Bank was to provide service to people in these remote areas. Here is a list of the offerings of MUDRA Bank:

• The bank offers refinance support to banks so that these can provide funds to micro units. The quantum of MUDRA loans are below Rs.10 lakh. The funding support constitutes micro credit schemes for small loans, refinance schemes for regional rural banks/ commercial banks/scheduled co-operative banks, programmes for women’s enterprises, and securitisation of loan assets.
• Credit Guarantee is offered to borrowers under the MUDRA loan scheme. Under Credit Guarantee, risk sharing is offered for a set of homogenous loans, instead of a loan guarantee for an individual debt. This improves the efficiency and receptiveness of the Credit Guarantee product.
• Promotional and development support is provided to customers. This includes skill development, sectoral development, improvement of financial literacy, entrepreneurship development, and institution development.

Schemes under MUDRA Bank

There are three schemes under the Pradhan Mantri MUDRA Yojana (PMMY) based on the stage of development and funding needs of the borrowing organisation. Here is a brief description of these loans:

• Shishu: Under this starter scheme, around Rs 50,000 is offered as loan amount.
• Kishor: Under this scheme, the loan amount may vary anywhere between Rs.50,000 to Rs.5 lakh, depending on the borrower. Mid-level business organizations can opt for the Kishor scheme.
• Tarun: A person opting for the Tarun scheme can avail a loan from Rs.5 lakh to Rs.10 lakh. Entrepreneurs who are keen to develop their setups can avail this loan.

Considering the overall growth and development of the micro enterprises sector in India, the offerings of MUDRA Bank will help meet the requirements of entrepreneur/business segments.