Government to set up Micro Units Development and Refinance Agency (MUDRA) Bank

Government to set up Micro Units Development and Refinance Agency (MUDRA) Bank

The Government proposes to set up Micro Units Development and Refinance Agency (MUDRA) Bank for granting loans to small entrepreneurs. The Union Finance Minister in the Union Budget 2015-16 has announced to set up MUDRA Bank through a statutory enactment. A sum of ₹ 20,000 crore would be allocated to the MUDRA Bank from the money available from shortfalls of Priority Sector Lending for creating a Refinance Fund to provide refinance to the Last Mile Financers. Another ₹ 3,000 crore would be provided to the MUDRA Bank from the budget to create a Credit Guarantee corpus for guaranteeing loans being provided to the micro enterprises.

 MUDRA Bank will operate through regional level financing institutions who in turn will connect with last mile lenders such as MFIs, Small Banks, Primary Credit Cooperative Societies, Self Help Groups (SHGs), NBFC (other than MFI) and other lending institutions.

 MUDRA Bank will refinance Micro-Finance Institutions through a Pradhan Mantri Mudra Yojana (PMMY). In lending, priority will be given to SC/ST enterprises. These measures will greatly increase the confidence of young, educated or skilled workers who would not be able to aspire to become first generation entrepreneurs; existing small businesses, too will be able to expand their activities.

 Since the MUDRA Bank will be set up through an enactment of law and it will take some time. To begin with, the same is being operationalised as a subsidiary of Small Industries Development Bank of India (SIDBI).

 This was stated by Shri Jayant Sinha, Minister of State in Ministry of Finance in written reply to a question in the Lok Sabha today.