All About MUDRA Bank

MUDRA Ltd. –

MUDRA Ltd. stands for Micro Units Development & Refinance Agency Ltd, is a Non-Banking financial institution being set up by Government of India for development and refinancing micro units’ enterprises. MUDRA Ltd, a statutory body, was set up as a result of Pradhan Mantri MUDRA Yojana (PMMY) which was launched in April, 2015. Also it was announced by the Honourable Finance Minister while presenting the Union Budget for FY 2016.

As per budget 2015-16, MUDRA Bank is to be set up with refinance corpus of Rs 20,000 Crore.

Functions / Roles of Mudra Ltd –

• The major role of MUDRALtd would be in refinancing and developing Micro Enterprises.
• It will provide funds to Non-corporate small business sector.
• It will also partner with State/Regional level financial intermediaries to provide financeto small/micro business enterprises.

Who are entitle to get loan from Mudra Ltd –

• Non – Corporate Small Business Segment (NCSBS) – comprising of millions of proprietorship / partnership firms running as small manufacturing units.
• Service sector units
• Shopkeepers
• Fruits / vegetable vendors
• Truck operators
• Food-service units
• Repair shops
• Machine operators
• Small industries
• Artisans
• Food processors
• Others in Rural and Urban Areas

Agencies that provide the loan –

• All Public Sector Banks 
• Regional Rural Banks (RRBs)
• Cooperative Banks
• Private Sector Banks
• Foreign Banks
• Micro Finance Institutions
• Non-Banking Finance Companies

MUDRA loans are available in three categories – For small business,

• Loans up to 50000/– is available under the ‘Shishu’ category
• Loans beyond 50,000 and up to 5 lakh under the ‘Kishor’ category
• Loans beyond 5 lakh and up to 10 lakh under the ’Tarun’ category

MUDRA Card provides borrower credit in a hassle free and flexible manner. MUDRA Card is a RuPay debit card with the following features –

• Cash credit / overdraft facility is available.
• Cash Withdrawal at ATM or Business Correspondent.
• Point of Sale (POS) Transaction facility is available.
• Borrower can repay the amount at any time thus reducing the interest rate.

Recent Developments –

Government of India recently converted MUDRA Ltd into MUDRA Bank. MUDRA Bank thus created is a wholly-owned subsidiary of SIDBI, which will be known as MUDRA (SIDBI) Bank.

Along with this, a Credit Guarantee Fund for MUDRA Units (CGFMU) will also be set up. In the Budget of 2015-16, Credit Guarantee Fund has been allocated with funds worth Rs 3000 Crore.

The fund is expected to guarantee more than Rs. 1 lakh crore worth of loans to micro and small units. And the National Credit Guarantee Trustee Company Ltd (NCGTC Ltd), a wholly-owned company of Government of India will be the legal Guardian / Trustee of the fund.

The guarantee would be provided on a portfolio basis to a maximum extent of 50 per cent of amount in default in the portfolio.