VINTAGE: Some important points about MUDRA

Registered Office: New Delhi (SIDBI)
Corporate Office: Mumbai (MSME Development Centre
At present MUDRA has been set up as a NBFC and wholly owned subsidiary of SIDBI
The Non Corporate Small Business Sector (NCSBS) accounts for a large share of industrial units
The biggest bottleneck to the growth of entrepreneurship in the NCSBS is lack of financial support to this sector. The support from the Banks to this sector is meagre, with less than 15% of bank credit going to Micro, Small and Medium Enterprises (MSMEs).
A vast part of the non-corporate sector operates as unregistered enterprises. They do not maintain proper Books of Accounts and are not formally covered under taxation areas. Therefore, the banks find it difficult to lend to them.
It is in this backdrop that Government of India (GoI) is setting up a Micro Units Development & Refinance Agency (MUDRA) Bank through a statutory enactment. This Agency would be responsible for developing and refinancing all Micro-finance Institutions (MFIs) which are in the business of lending to micro / small business entities engaged in manufacturing, trading and service activities.
Since the enactment is likely to take some time, it is proposed to initiate MUDRA as a unit of SIDBI to benefit from SIDBI’s initiatives and expertise.
MUDRA would primarily be responsible for:

1) Laying down policy guidelines for micro enterprise financing business
2) Registration of MFI entities
3) Supervision of MFI entities
4) Accreditation /rating of MFI entities
5) Laying down responsible financing practices to ward off over indebtedness and ensure proper client protection principles and methods of recovery
6) Development of standardised set of covenants governing last mile lending to micro enterprises
7) Promoting right technology solutions for the last mile
8) Formulating and running a Credit Guarantee scheme for providing guarantees to the loans/portfolios which are being extended to micro enterprises
9) Supporting development & promotional activities in the sector
10) Creating a good architecture of Last Mile Credit Delivery to micro businesses under the scheme of Pradhan Mantri MUDRA Yojana

Micro Finance is an economic development tool whose objective is to provide income generating opportunities to the people at the bottom of the pyramid. It covers a range of services which include, in addition to the provision of credit, many other credit plus services such as savings, pensions, insurance, money transfers, counseling, financial literacy and other social support services.
The players in the Micro Finance sector can be qualified as falling into 3 main groups:

The SHG-Bank linkage model through Commercial Banks and Regional Rural Banking channels,
The Non Banking Finance Company and
Others including Section 8 (formerly Section 25) Companies, Trusts, Societies, etc.

Under the aegis of Pradhan Mantri MUDRA Yojana (PMMY), MUDRA has already created its initial products / schemes. 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 and also to provide a reference point for the next phase of graduation / growth to look forward to. The financial limit for these schemes are :-

MUDRA’s delivery channel is conceived to be through the route of refinance primarily to Banks/NBFCs/MFIs.
At the same time, there is a need to develop and expand the delivery channel at the ground level. In this context, there is already in existence, a large number of ‘Last Mile Financiers’ in the form of companies, trusts, societies, associations and other networks which are providing informal finance to small businesses.
Pradhan Mantri Mudra Yojana (PMMY) is a Government of India scheme, which enables a small borrower to borrow from banks, MFIs, NBFCs for loans upto 10 lakh for non farm income generating activities. Generally, loans upto 10 lakh issued by banks for Micro Small Enterprises is given without collaterals as per the guidelines issued by RBI.
Recently Govt. Has decided to provide an additional fund of ₹100000 crore (US$15 billion) to the market and will be allocated as

CEO of MUDRA BANK is Mr.JIJI MAMMEN
The bank will have an initial corpus of ₹20000 crore and a credit guarantee fund of ₹3000 crore. It will also serve as a regulator for other micro-finance institutions (MFIs) and provide them refinancing services. It will provide guidelines for MFIs and give them ratings.

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