Mudra is our innovation of funding the unfunded : Narendra Modi
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Mudra is our innovation of funding the unfunded : Narendra Modi

Mudra is our innovation of funding the unfunded : Narendra ModiApril 08, 2015 :: Prime Minister Narendra Modi on Wednesday launched MUDRA (Micro Units Development and Refinance Agency) bank under the Pradhan Mantri Jan Dhan Yojana and said it will fund the unfunded small entrepreneurs. After ‘banking the un-banked’ with the Jan Dhan Yojana, it’s time to ‘fund the unfunded’, said the prime minister on this occasion. Mudra is our innovation of funding the unfunded,” He added


Mudra Bank stands for Micro Units Development Refinance Agency (MUDRA). Also, Mudra, in Hindi, means currency. Mudra Bank is being set up through a statutory enactment and will be responsible for developing and refinancing through a Pradhan Mantri MUDRA Yojana.

 Since small entreprenuers are businssess are often cut off from banking system because of limited branch presence, Mudra Bank will partner with local coordinators and provide finance to “Last Mile Financiers” of small/micro businesses.

Mudra Bank will ensure clients are properly protected and will lay down principles and methods of loan recovery in case of a default. The Bank will also rigidly follow “responsible financing practices” so deter borrowers from indebtedness.

Finance Minister Arun Jaitley in his first full-year Budget in February had proposed the creation of MUDRA bank with a corpus of Rs 20,000 crore and credit guarantee corpus of Rs 3,000 crore.

 MUDRA bank is expected to benefit about 5.77 crore small business units.

 Among others, the bank will benefit small manufacturing units, shopkeepers, fruit and vegetable sellers, beauty parlour owners, truck operators, hawkers, artisans in rural and urban areas with financing requirements up to Rs 10 lakh.

 MUDRA bank will be responsible for regulating and refinancing all micro-finance institutions (MFIs) which are in the business of lending to micro or small business entities engaged in manufacturing, trading and services activities.

 MUDRA bank would lay down policy guidelines for micro/small enterprise financing business, registration of MFI entities, regulation of MFI entities and accreditation /rating of MFI entities.

 The initial products and schemes under this umbrella have already been created and the interventions have been named ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur

‘Shishu’ would cover loans up to Rs 50,000 while ‘Kishor’ above Rs 50,000 and up to Rs 5 lakh. ‘Tarun’ category will cover loans of above Rs 5 lakh and upto Rs 10 lakh.

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