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Pradhan Mantri Mudra Yojana

Pradhan Mantri Mudra Yojana is revolutionary scheme launched to help specifically the small entrepreneurs. The scheme aims at refinancing and developing micro units under the Micro Units Development and Refinance Agency (MUDRA) Bank – a new institution being set up by Government of India .The scheme was mooted  by the Finance Minister Arun Jaitly during his budget speech 2016-17 keeping in focus the needs of small non-corporate small business sector which is deprived of solid financial support from the credit and banking agencies to start business activities which otherwise corporate sector and big businessmen easily  avail of. The target of the Mudra Yojana is to grant fund to small entrepreneurs on easy terms. It is a heartening fact that till date loans worth about Rs. 1 lakh crore have been sanctioned to small entrepreneurs.

Benefits and 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.

The scheme has been worked out under a broad vision of the government of India that besides being job seekers the Indian youth should also grow as job creators thus fulfilling the government ambitious plan to make the youth skilled and self-reliant to cope with the emerging challenge on the front of employment in current technology driven scenario.  Therefore in order to realize the twin goal of creating  a skilled India on the horizon and empowering small businessmen and traders three categories of interventions in granting fund/loan under this scheme  have  been named which are as follows-

  • Shishu :- Loan up to Rs. 50,000
  • Kishore :- Loan ranging from Rs. 50,000 to Rs. 5 lakh
  • Tarun :- Loan above Rs. 5 lakh and below Rs. 10 lakh

Furthermore side by side assuring fulfillment of needs of loan to be allotted to them by Micro Units Development and Refinance Agency Bank the other three basic categories which are to be covered under this ambitious scheme include

  1. growth
  2. development
  3. funding needs of the beneficiaries
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.

The main target beneficiaries of MUDRA Bank are aspiring entrepreneurs who will be provided through refinancing because it is these small business who suffer from financial strength and are often not able to repay loans due to the entrapment of vicious circle of interest and compound interest. On the one hand they normally are not able to repay their previous loan and on the other hand need more financial assistance to take their businesses to high scale which don’t get and resulting in breakdown of their business. But with the emergence of Mudra Bank they have found new avenues to get further credit through refinancing, which in turn help them with considerable pool of funds from micro financial institutions. Moreover with Mudra Bank in place rating of MFIs is a very specific point which is meant to equip small medium entrepreneurs with variety of range options in choosing right agency as their creditors in terms of interest rate and repayment conditions

With these facilities being offered they are tremendously aided and assisted in not falling into the pit of vicious circle of torturous interest. Hence, they can conduct all their business activities in carefree, conducive and relaxed environment.

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