As Prime Minister Narendra Modi launches Mudra Bank to help small entrepreneurs get loans for their businesses, we bring you 11 most important features of this new bank.
Prime Minister Narendra Modi is launching Mudra Bank on Wednesday which will benefit small entrepreneurs and will also act as a regulator for 'Micro-Finance Institutions (MFIs).
The roles envisaged for MUDRA include laying down policy guidelines for micro enterprise financing business and registration of MFI entities as well as their accreditation and rating.
Here are 11 things you must know about Mudra Bank and how it will benefit you:
What does it stand for?
Mudra Bank stands for Micro Units Development Refinance Agency (MUDRA). Also, Mudra, in Hindi, means currency.
Setting up
Mudra Bank is being set up through a statutory enactment and will be responsible for developing and refinancing through a Pradhan Mantri MUDRA Yojana.
Last mile financiers
Since small entreprenuers are businssess are often cut off from banking system because of limited branch presence, Mudra Bank will partner with local coordinators and provide finance to "Last Mile Financiers" of small/micro businesses.
Targets
The Finance Ministry said measures to be taken up by MUDRA are targeted towards mainstreaming young, educated or skilled workers and entrepreneurs including women entrepreneurs.
5.77 crore
The bank will cater to 5.77 crore small business units that are spread all across India who currently find it difficult to access credit from the regular banking system.
Recovery method
Mudra Bank will ensure clients are properly protected and will lay down principles and methods of loan recovery in case of a default. The Bank will also rigidly follow "responsible financing practices" so deter borrowers from indebtedness.
Corpus
The Bank will be set up with a corpus of Rs 20,000 crore and a credit guarantee fund of Rs 3,000 crore.
Shishu/Kishor/Tarun
The Bank will nurture small businesses through different stages of growth and development of businesses termed as Shishu, Kishor and Tarun.
Shishu
This iswill be the first step when the business is just starting up. The loan cover in this stage will be upto Rs 50,000.
Kishor
In this stage, the entreprenuer will be eligible for a loan ranging from Rs 50,000 to Rs 5 lakh.
Tarun
This last and final category will provide loans for upto Rs 10 lakh.
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