Mudra Yojana: A Detail Study

Mudra Yojana, or more accurately, Pradhan Mantri Mudra Yojana is a government scheme to encourage the establishment of small and medium-sized corporate and non-corporate enterprises in the country. MUDRA is an abbreviation for Micro Units Development and Refinance Agency bank. It's a public sector financial institution that would provide loans at low rates to Microfinance institutions and Non-banking financial institutions to lend money to MSMEs. The scheme was inaugurated on 8th April 2015 to provide loans up to 10 lakhs to corporate, non-corporate, non-farm small, and micro enterprises. Any loans granted under this scheme are called Mudra Loans.

Insights of Mudra Yojana

Mudra Yojana is structured to lend a maximum amount of Rs. 10 lakhs to non-corporate, non-farm small and micro enterprises. The loans under the scheme are sub-categorized into three schemes based on the loan amount, namely: Shishu, Kishor, and Tarun.

SHISHU:

Under this category, the borrower is allowed a loan of up to Rs. 50,000.

KISHOR:

Under this category, the borrower is allowed a loan ranging from Rs. 50,000 to Rs. 5,00,000.

TARUN:

Under this category, the borrower is allowed a loan that is more than Rs. 5,00,000 and up to Rs. 10,00,000.

The government has put eligibility criteria to make it confined and such that it benefits small businesses and manufacturing units directly. Those eligible businesses are well defined under the scheme, which includes non-corporate small business segments like proprietorships, and partnership firms that can be functioning as small manufacturing units, service-oriented units, shopkeepers, vendors, repair shops, and the like in both urban and rural areas of India.

Milestones & Statistics for Mudra Yojana

Since its inception, Mudra Yojana has achieved many milestones. Like in the previous year 2021-2022, the number of loans sanctioned under Mudra Yojana was 5,37,95,526. The amount of money sanctioned under the scheme was Rs. 3,39,110.35 Crores. Mudra Yojana has assisted many Small scale businesses and hence in the growth of the Indian economy.

Benefits

1. MUDRA bank was set up to meet the financing needs of the Non–Corporate Small Business Sector (NCSBS) or the informal sector to welcome them to the mainstream business to promote economic growth. The biggest obstruction faced by most Non-corporate small businesses is the scarcity of financial support. More than 3/4th of the NCSBS does not have access to formal sources of financing from commercial banks, NBFCs, MFIs, etc.

2. MUDRA Bank is a refinancing institution set up under this scheme. MUDRA does not lend directly to micro-entrepreneurs / individuals. Mudra loans under Pradhan Mantri Mudra Yojana (PMMY) can be availed from the nearest branch office of an established bank, NBFC, MFI, etc.

3. Borrowers can also file online applications for MUDRA loans on the Udyamimitra portal (www.udyamimitra.in) set up under Mudra Yojana.

4. Another benefit of the Mudra Yojana is that there are no agents or middlemen engaged by MUDRA bank for availing of Mudra Loans, hence there are no additional benefits of intermediaries.

5. Mudra Yojana is designed to use innovative financing means including technology to keep the lowest cost of financing for the end user. Henceforth, the loan is granted at the lowest interest rates.

6. Loans under the Mudra Yojana, which is up to Rs. 10,00,000 lakhs, are granted by banks or NBFCs without collaterals and guarantees.

7. The borrowers are granted with MUDRA Card which will be a Rupay debit card only and can be used just like other cards for withdrawing cash from ATMs and POS machines.

The scheme provides one of the most hassle-free and flexible ways of availing credit while having the requirement of working capital in the form of CC/OD.