Mudra Bank Loan Features and Benefits

Micro Units Development and Refinance Agency Bank, also referred to as MUDRA Bank is an initiative by Prime Minister Narendra Modi that was launched on April 8, 2015. Conceptualized during the annual budget of 2015-2016, this scheme came into practice from April. 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. 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 the MUDRA Bank was to provide service to people in these unreachable areas.

Advantages and Objectives of MUDRA Bank

As mentioned earlier, the main motive behind the inception of MUDRA Bank is to offer banking services to needy people in rural areas. Here are some benefits and objectives of the MUDRA Bank:

• MUDRA Bank offers financial support to empower small businesses and first-time entrepreneurs.
• Banking services are now available to people in the remote areas. Earlier, people would take loans from money lenders and charged very high interest rates. Thanks to MUDRA bank, people can now avail loans for their business at nominal rates of interest.
• The MUDRA Bank system offers maximum benefits at minimum risk for all micro businesses. Small business setups can also benefit from this set, as it offers a credit agent scheme for a good start.
• A person taking loan from MUDRA Yojna also gets a credit guarantee. Under this, in case the borrower goes into debts the government bears the loan’s responsibility.
• The agents appointed by the MUDRA committee assist the borrower in organizing and processing a business, ensuring minimum risks and negative results.
• A regular evaluation of small business units and sectors, based on their performance, is done in order to make sure that the business is running in profit and has no liabilities.

Schemes under MUDRA Bank

There are three schemes, according to the requirement of the borrower, where the loan will be provided. It is further divided into three segments - the starters, mid-stage finance and the level growth seekers, based on the borrower. Here is a brief information about the three loans offered by the MUDRA Bank, under the Pradhan Mantri Mudra Yojna (PMMY):

• Shishu: A starter scheme, around Rs 50,000 is offered as a 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: The third and final level of the scheme, a person opting for the Tarun scheme can avail a loan from Rs 5 lakh to Rs 10 lakh. Businesses who are keen to develop their setups can avail this loan.

There are a number of advantages of availing loans from the MUDRA Bank. These schemes meant for small business setups can definitely bring about a change to the Indian economy.