ShortNote:MUDRABank/IndianBudget/2015

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MicroFinanceDevelopmentRefinanceAgency)willstrengthenfinanciallythemicrofinance
institutionsandextendtheirreach.
After'bankingtheunbanked'withtheJanDhanYojana,it'stimeto'fundtheunfunded
Millionsofcommonmenandwomeninthiscountry,whorunsmallbusinesses,havealmostremained
outsidethenetofformalinstitutionalfinance,inspiteoftheirlargecontributionstotheeconomy
Settingup
LaunchedinApril8th,2015thebankwouldprimarilyberesponsibleforregulatingmicroandsmall
enterprisefinancingbusiness,andsupportingthem.
MudraBankisbeingsetupthroughastatutoryenactmentandwillberesponsiblefordevelopingand
refinancingthroughaPradhanMantriMUDRAYojana.
Corpus
TheBankwillbesetupwithacorpusofRs20,000croreandacreditguaranteefundofRs2,000crore.
RolesoftheBank
Layingdownpolicyguidelinesformicroenterprisefinancingbusiness
RegistrationofMFIentities
Accreditation/ratingofMFIentities
Layingdownresponsiblefinancingpracticestowardoffoverindebtednessandensureproperclient
Protectionprinciplesandmethodsofrecovery
Developmentofstandardisedsetofcovenantsgoverninglastmilelendingtomicroenterprises
Promotingrighttechnologysolutionsforthelastmile
FormulatingandrunningaCreditGuaranteeschemeforprovidingguaranteestotheloans/portfolios
whicharebeingextendedtomicroenterprises
Supportdevelopment&promotionalactivitiesinthesector
CreatingagoodarchitectureofLastMileCreditDeliverytomicrobusinessesundertheschemeof
PradhanMantriMUDRAYojana
Providingaccesstoinstitutionalfinancetosuchmicroandsmallbusinessunitsandenterpriseswillnot
onlyhelpinimprovingthequalityoflifeoftheseentrepreneurs,butalsoturnthemintostrong
instrumentsofgrowthandemploymentgeneration,
HighlightsoftheProject
PrimeMinisterNarendraModilaunchedtheRs.20,000crore(INR200billion)MUDRABank
Thiswillprimarilybeaimedatprovidingrefinancingtosmallandmediumenterprises,particularly
thosebelongingtomembersofscheduledcastesandscheduledtribes
Themoveisaimedatbenefitingsome58millionsmallbusinessesinthecountry,whoaccountfora
merefourpercentofinstitutionalfunding,despiteemployingover120millionpeople,manyfrom
unprivilegedstrataofsociety,
CoverageofsixcroreIndianfamilies
Thebankwouldalsogetanadditional3,000crore(INR30billion)inthebudgettocreateacredit
guaranteecorpusforguaranteeingloansbeingprovidedtothemicroenterprises
TheBankwillcaterto5.77croresmallbusinessunitsthatarespreadallacrossIndiawhocurrentlyfind
itdifficulttoaccesscreditfromtheregularbankingsystem[AccordingtotheNSSOSurveyof2013,
therearesome5.77croresmallbusinessunits,mostlyindividualproprietorship,whichrun
manufacturing,tradingorservicesactivities.]
OwnAccountenterprisesfinancingmyriadofsmallmanufacturingunits,shopkeepers,fruits/
vegetablevendors,truck&taxioperators,foodserviceunits,repairshops,machineoperators,small
industries,artisans,foodprocessors,streetvendorsandmanyothersmainlybelongingtopeoplefrom
theScheduledCaste,ScheduledTribeorOtherBackwardClasses.Thebiggestbottleneckofthis
sectorisfinancialsupportwhichwillnowbechannelizedthroughMUDRABank.
MFI(MicroFinanceInstitutions)PoliciesMUDRABankwillalsoregisterMFIsandberesponsiblefor
accreditationandratingofMFI.Itwillalsolaydownpoliciesforproperlastmilepracticestobefollowed

byMFItopreventindebtednessandprovideproperclientprotection
LastMileFinancierssmallentrepreneursarebusinessesareoftencutofffrombankingsystem
becauseoflimitedbranchpresence,MudraBankwillpartnerwithlocalcoordinatorsandprovide
financeto"LastMileFinanciers"ofsmall/microbusinesses.
RecoverymethodtheBankwillensurethattheclientsareproperlyprotectedandwilllaydown
principlesandmethodsofloanrecoveryincaseofadefault.TheBankwillalsorigidlyfollow
"responsiblefinancingpractices"sodeterborrowersfromindebtedness.
Targets
TheFinanceMinistrysaidmeasurestobetakenupbyMUDRAaretargetedtowardsmainstreaming
young,educatedorskilledworkersandentrepreneursincludingwomenentrepreneurs.
LoanSchemesundertaken
MUDRABankwillofferloansunderthreeschemesThebankwillnurturesmallbusinessesthrough
differentstagesofgrowthanddevelopmentofbusinesstermedasShishuKishorandTarun
1.ShishuThiswillbethefirststepwhenthebusinessisjuststartingup.Theloancoverinthisstageis
Rs.50,000
2.KishoreInthisstage,theentrepreneurwillbeeligibleforaloanrangingfromRs50,000toRs5
lakh
3.TarunThislastandfinalcategorywillprovideloansuptoRs10lakh
InitialOfferings/Products
Sector/activityspecificschemes,suchasschemesforbusinessactivitiesinLandTransport,
Community,Social&PersonalServices,FoodProductandTextileProductsectors.Schemeswould
similarlybeaddedforothersectors/activities.
MicroCreditScheme(MCS)
RefinanceSchemeforRegionalRuralBanks(RRBs)/ScheduledCooperativeBanks
MahilaUddyamiScheme
BusinessLoanforTraders&Shopkeepers
MissingMiddleCreditScheme
EquipmentFinanceforMicroUnits
OtherproposedofferingsoftheMUDRAwhichareyettobelaunched
MUDRACard
PortfolioCreditGuarantee
CreditEnhancement
ApartfromcreditingMUDRAhasalsoproposedsomedevelopmentalactivitiesaslistedunder
Supportingfinancialliteracy
PromotionandSupportofGrassRootInstitutions
CreationofFrameworkforSmallBusinessFinanceEntities
SynergieswithNationalRuralLivelihoodsMission
SynergieswithNationalSkillDevelopmentCorporation
WorkingwithCreditBureaus
WorkingwithRatingAgencies