MUDRA

Prime Minister Narendra Modi launched the MUDRA (Micro Units Development Refinance Agency) Bank on Wednesday and said supporting small entrepreneurs of the country was the biggest way to help the Indian economy grow and prosper.Stressing the contribution of small entrepreneurs in the economy , Modi expressed confidence that major banks too would, within a year, adopt the MUDRA model.
Finance minister Arun Jaitley had announced setting up of the MUDRA Bank in his 2015-16 budget unveiled in February . The bank has been conceived to help bottom-ofthe-pyramid entrepreneurs who find it difficult to access the formal credit system. Under the Pradhan Mantri Mudra Yojana, micro-entrepreneurs will be sanctioned loans ranging from Rs.50,000 to Rs 10 lakh.
According to government estimates, there are nearly 5.77 crore small business units, mostly individual proprietorship, which run small manufacturing, trading or service businesses and 62% of these are owned by SC-ST-OBC.
The MUDRA Bank will have a corpus of Rs.20,000 crore, and credit guarantee corpus of Rs.3,000 crore. Jaitley had said the MUDRA Bank will refinance micro-finance institutions through a Pradhan Mantri Mudra Yojana. Priority in lending would be given to SC-ST enterprises. Modi said there was a perception that large industries create more employment but data showed that only 1.25 crore people find employment in big industries, whereas small enterprises employ 12 crore people. The PM said while there were a number of facilities provided for large industries in India, there was a need to focus on these 5.77 crore self-employed people who use funds of Rs.11 lakh crore, with an average per unit debt of merely Rs.17,000 to employ 12 crore Indians.
Modi cited the example of the kite manufacturing units in Gujarat and how they were transformed from a cottage industry to a Rs.500 crore business. Speaking about women's self-help groups, Modi said the kind of honesty and integrity showed by these loan takers was seldom seen in any other sector.