New Delhi, April 8: Prime Minister Narendra Modi Wednesday launched a bank with a corpus of Rs 20,000 crore to extend credit of up to Rs 10 lakh to small businesses and regulate micro-finance institutions, to promote their growth, add to the country’s output and create jobs.
The move is aimed at benefiting 58 million small businesses, who account for a mere 4 per cent of institutional funding, despite employing more than 120 million people, many from unprivileged strata of society, officials said.
Modi said he was delivering on a promise made. “After ‘banking the un-banked’ with the Jan Dhan Yojana, it’s time to ‘fund the unfunded’,” he said at the launch of what is formally called the Micro Units Development and Refinance Agency (Mudra).
“Mudra is our innovation of funding the unfunded,” the Prime Minister said at the event, attended among others by Union finance minister Arun Jaitley.
The initiative will also lay down the norms for responsible financing practices for micro-finance institutions so that small businesses do not face hardship over indebtedness, while getting a fair environment for repayment.
Mudra bank, Modi said, was directed at street vendors, tailors and roadside mechanics, who make up the 5.77 crore micro entreprenaurs. This new measure had the potential to bring about a major transformation, the Prime Minister said. “In one year our established banks will also adopt the Mudra model,” he said.
The primary product of Mudra bank will be refinance for lending to micro businesses where initial products and schemes have been divided into three categories – “Shishu”, “Kishor” and “Tarun”.
Loans up to Rs 50,000 will be given under “Shishu” scheme for units in formative years, between Rs 50,000 to Rs 5,00,000 under “Kishor” for enterprises in operation for a few years and up to Rs 10,00,000 under “Tarun” for established firms. IANS
