Micro Units Development and Refinance Agency Bank (MUDRA) is a refinancing institution setup of government of India for developing and refinancing micro units i.e. helping small borrowers to borrow money i.e. loan. MUDRA will refinance to intermediaries bank such as co-operative societies, regional rural banks and others who provide finance to borrowers running small businesses; proprietor or partnership firms. So basically MUDRA bank will provide loan directly.

Objective of PMMY:

Providing financial support (loan) for the development of individual’s who run micro units (non-corporate small business sector – NCSBC) and are denied loans from elsewhere. This will help in promoting entrepreneurship as the hurdle of lack of monetary support will be resolved. Another objective is to provide skill development, entrepreneurship, marketing training and financial literacy. Currently small business sector are deprived of credit and have to either rely on their own income or friends and relatives.

How it will be achieved:

It will be done by setting up subsdiary of Small Industries Bank of India (SIDBI) which provides funding to the micro, small and medium scale enterprises. For this, new products have been created.

Different products under Mudra Bank:

There are three products designed:

• Shishu: Loans upto Rs. 50,000 would be given
• Kishore: Loans ranging from Rs. 50,000 to Rs. 5, 00,000 (5 Lakhs)
• Tarun: Loans ranging from Rs. 5, 00,000 (5 Lakhs) to Rs. 10, 00,000 (10 Lakhs)

As per official data, till 25th October 2015, the loan amount disbursed under each of the above 3 products are as follows:

• Shishu: Rs. 7992.07 Crore
• Kishore: Rs. 17039.70 Crore
• Tarun: Rs. 10380.97

Total accounts opened are 5862028 and the total loan amount disbursed is Rs. 35412.74 Crore.

Benefits & Features of Mudra Bank:

• Interest rate would be applicable as per RBI guidelines and will vary for each lending institution.
• Credit can be availed in a hassle free manner
• Security/collateral free loan
• Borrowers won’t be charged any processing fee which is ideally in the range of 1%-2%.
• Subsidy is not given to the borrower for the loan availed
• Problems faced in setting up infrastructure will be resolved

So with Pradhan Mantri Mudra Yojana, these small businesses will get essential loan to run their businesses and eventually contribute to the development of themselves, their families and in turn for the nation’s GDP, generating employment too.

Eligibility or who can avail loan facility:

• Individuals seeking loan should be an Indian citizen.
• Loan requirement should be less than Rs. 10 Lakh.
• Loans can be availed by small enterprises from rural and urban areas in various areas such small retailers, women entrepreneurs, manufacturing and trading enterprises and others.

Few of the applicable borrowers are:

• Those who are seeking vehicle loan – commercial, car, two wheeler
• Small micro finance agencies
• Food and vegetable vendors
• Hair cutting salons
• Beauty parlour
• Transport companies
• Truck operators
• Food service units
• Repair shops
• Machine operators
• Small industries
• Artists
• Food processing companies
• Self help group
• Pottery businesses
• Carpentry
• Professional service providers

Loan will not be provided to enterprises generating income from farming sector activities.

Pradhan Mantri Mudra Yojana (PMMY) was launched on 8th April 2015 by India’s honorable finance minister Shri. Arun Jaitley during the budget held on February 28, 2015.