Micro Units Development Refinance Agency (MUDRA) Bank

Revision as of 06:55, 24 March 2015

Micro Units Development Refinance Agency (MUDRA) Bank is a refinance institution for micro-finance institutions. As on date, MUDRA is conceived only as a refinance institution and not as a regulator for the micro finance institutions.

Union Budget 2015-16 has proposed to create MUDRA with a corpus of Rs. 20,000 crore made available from the shortfalls of Priority Sector Lending. In addition, there is a credit guarantee corpus of Rs.3,000 crore for guaranteeing loans being provided to the micro enterprises. MUDRA Bank will refinance Micro-Finance Institutions through a Pradhan Mantri Mudra Yojana.

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

In lending, MUDRA proposes to give priority to enterprises set up by the under-privileged sections of the society particularly those from the scheduled caste / tribe (SC/ST) groups, first generation entrepreneurs and existing small businesses. There are estimated to be some 5.77 crore small business units in India, mostly individual proprietorship, which run small manufacturing, trading or service businesses. 62% of these are owned by SC/ST/OBC as stated in the Union Budget speech of 2015-16.

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).

Contributed by

• Rosemary Abraham, IES(2006)