5/12/2019 What is Mudra Yojana of Narendra Modi-led central government?

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What is Mudra Yojana of Narendra Modi-led central

government?
Pradhan Mantri Mudra Yojana (PMMY) or more commonly known as Pradhan
Mantri Mudra Yojana is in the news again, and this time because of the concern
raised over loans turning into NPAs by former RBI governor Raghuram Rajan.
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India Today Web Desk

New Delhi September 13, 2018 UPDATED: September 13, 2018 18:07 IST

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MUDRA loans are available
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M
udra Yojana is a scheme launched by Prime Minister Narendra Modi on April 8,
2015, to provide loans up to Rs 10 lakh to non-corporate, non-farm small or
micro-enterprises. The loans under Mudra Yojana or say Pradhan Mantri MUDRA
Yojana (PMMY) are given by commercial banks, RRBs, small finance banks, cooperative
banks, MFIs and NBFCs.

Mudra Yojana: Why is it in news?

Mudra Yojana, the scheme which the central government takes pride in, met with a
concern when former RBI governor Raghuram Rajan submitted his report to the MP's
panel.

Rajan cautioned that MUDRA loans are another crisis in the making.

He said that the next crisis in India's banking sector could come from loans given to
the unorganised micro and small business, called MUDRA (Micro Units Development
and Refinance Agency) loans, and credit extended through the Kisan credit card.

File photo of Raghuram Rajan

In a note on bank NPAs (non-performing assets) Rajan told the government to 'refrain
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from setting ambitious credit targets or waiving loans'.
After two-year battle with railways, Builders must refund GST in case
man gets Rs 33 as refund for buyers cancel flats
"Both MUDRA loans asticket
cancelled well as the Kisan Credit Card, while popular, have to be
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5/12/2019 What is Mudra Yojana of Narendra Modi-led central government? - Education Today News

examined more closely for potential credit risk," Rajan wrote in his 17-page note.

Rajan also flagged the Credit Guarantee Scheme for MSME's (Micro, Small and Medium
Enterprises), run by the SIDBI (Small Industries Development Bank of India) as 'a
growing contingent liability', which needs to be examined with urgency.

About the Pradhan Mantri MUDRA Yojana (PMMY) Scheme

The objective of MUDRA scheme is to refine collateral-free loans given by the lenders
to small borrowers. It has a corpus of Rs 20,000 crore and has the provision of lending
from Rs 50,000 to Rs 10 lakh to small entrepreneurs.

Mudra Launch Ceremony (Image: mudra.org.in)

As per data from the MUDRA website, a total of Rs 6.37 lakh crore has been disbursed
under the MUDRA scheme till date by public and private sector banks, regional rural
banks, and micro-finance institutions.
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The unique feature of this scheme is that the MUDRA Card permits an access to
After two-year battle with railways, Builders must refund GST in case
working capitalman
through ATMs
gets Rs 33 andfor
as refund card machines. buyers cancel flats
cancelled ticket
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5/12/2019 What is Mudra Yojana of Narendra Modi-led central government? - Education Today News

There are three types of loans under PMMY:

Loans up to Rs 50,000 are categorized as SHISHU
Loans from Rs 50,001 to Rs 5 lakh are categorized as KISHORE
Loans from Rs 5,00,001 to Rs 10 lakh are categorized as TARUN

While there is no processing fee for Shishu and Kishore, Tarun loan attracts a fee of 0.5
per cent of the loan amount (plus applicable tax).

The objective of MUDRA scheme

MUDRA loans are available for non-agricultural activities and activities allied to
agriculture such as dairy and poultry. It aims to fund those who have a business plan
to generate income from a non-farm activity -- like manufacturing, processing, or
trading -- but don't have enough capital to invest.

PMMY scheme also puts in place MUDRA Bank which monitors the network of
microfinance institutions and also helps to register new institutions as well.

MUDRA scheme aims to reduce the unemployment by providing micro enterprises

with credit facility which will not only increase the country's GDP but also create jobs.

The scheme also aims to boost the financial inclusion by taking the last mile credit
delivery to micro businesses. It also works on the entry of the informal economy into
the formal sector as most of the time income from the informal sector is not taxed.

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