Micro Units Development Refinance Agency (MUDRA) Bank
Micro Units Development Refinance Agency (MUDRA) Bank is a refinance institution for micro-finance institutions. As on date, MUDRA is conceived not only as a refinance institution and but also as a regulator for the micro finance institutions (MFIs).
The MUDRA Bank is primarily be responsible for –
1) Laying down policy guidelines for micro/small enterprise financing business
2) Registration of MFI entities
3) Regulation of MFI entities
4) Accreditation /rating of MFI entities
5) Laying down responsible financing practices to ward off indebtedness and ensure proper client protection principles and methods of recovery
6) Development of standardized set of covenants governing last mile lending to micro/small enterprises
7) Promoting right technology solutions for the last mile
8) Formulating and running a Credit Guarantee scheme for providing guarantees to the loans which are being extended to micro enterprises
9) Creating a good architecture of Last Mile Credit Delivery to micro businesses under the scheme of Pradhan Mantri Mudra Yojana.
Union Budget 2015-16 has proposed to create MUDRA with a corpus of Rs. 20,000 crore made available from the shortfalls of Priority Sector Lending. In addition, there is a credit guarantee corpus of Rs.3,000 crore for guaranteeing loans being provided to the micro enterprises. MUDRA Bank will refinance Micro-Finance Institutions through a Pradhan Mantri Mudra Yojana.
MUDRA Bank operates through regional level financing institutions who in turn connect with last mile lenders such as Micro Finance Institutions (MFIs), Small Banks, Primary Credit Cooperative Societies, Self Help Groups (SHGs), NBFC (other than MFI) and such other lending institutions.
In lending, MUDRA gives priority to enterprises set up by the under-privileged sections of the society particularly those from the scheduled caste / tribe (SC/ST) groups, first generation entrepreneurs and existing small businesses. There are estimated to be some 5.77 crore small business units in India, mostly individual proprietorship, which run small manufacturing, trading or service businesses. 62% of these are owned by SC/ST/OBC as stated in the Union Budget speech of 2015-16.
MUDRA Bank is proposed to be set up through an enactment of law and it will take some time. To begin with, the same is being operationalised as a subsidiary of Small Industries Development Bank of India (SIDBI). It was launched on 8 April 2015. On 6 January 2016, it was converted as a wholly owned subsidiary of SIDBI and renamed as MUDRA (SIDBI) Bank. The micro finance institutions (MFIs) can become Member Lending Institutions (MLIs) with MUDRA (SIDBI) Bank for refinance and with National Credit Guarantee Trustee Company (NCGTC) for credit guarantee.
More details may be seen from the FAQ of MUDRA. On 6 November 2015 Hon'ble Prime Minister stated that under the Pradhan Mantri Mudra Yojana banks have provided more than six million loans to small businesses for a total value of nearly Rs 38,000 crores or six billion dollars. If one conservatively estimates that each loan creates 2 jobs it has led to the creation of 12 million new jobs by 6 November 2015. State wise disbursement by MUDRA may be seen here.