Tuesday, 27 October 2015

MUDRA Bank: Weighing the Possible Benefits

The Prime Minister Narendra Modi  launched the promised Micro Units Development and Refinance Agency Ltd (MUDRA) Bank on 8 April, 2015 with a corpus of Rs 20,000 crore and a credit guarantee corpus of Rs 3,000 crore. The launch was the fulfillment of an announcement made earlier by the Finance Minister Arun Jaitley in his FY 15-16 Budget speech.

How Can MUDRA Bank Make a Difference to the Economy?

Most individuals, especially those living in rural and interior parts of India, have been excluded from the benefits of formal banking system. Therefore, they never had access to insurance, credit, loans and other financial instruments to help them establish and grow their micro businesses. So, most individuals depend on local money lenders for credit. The loan comes at high interest and often with unbearable conditions, which make these poor unsuspecting people fall in a debt-trap for generations. When businesses fail, the borrowers become vulnerable to the lender’s strong-arm tactics and other forms of humiliation.
As per NSSO Survey of 2013, there are close to 5.77 crore small-scale business units, mostly sole proprietorships, which undertake trading, manufacturing, retail and other small-scale activities. Compare this with the organised sector and larger companies that employ 1.25 crore individuals. Clearly, the potential to harness and nurture these micro businesses is vast and the government recognises this. Today, this segment is unregulated and without financial support or cover from the organised financial banking system.

The principal objectives of the MUDRA Bank are:

  1. Regulate the lender and the borrower of microfinance and bring stability to the microfinance system through regulation and inclusive participation.
  2. Extend finance and credit support to Microfinance Institutions (MFI) and agencies that lend money to small businesses, retailers, self-help groups and individuals.
  3. Register all MFIs and introduce a system of performance rating and accreditation for the first time. This will help last-mile borrowers of finance to evaluate and approach the MFI that meets their requirement best and whose past record is most satisfactory. This will also introduce an element of competitiveness among the MFIs. The ultimate beneficiary will be the borrower.
  4. Provide structured guidelines for the borrowers to follow to avoid failure of business or take corrective steps in time. MUDRA will help in laying down guidelines or acceptable procedures to be followed by the lenders to recover money in cases of default.
  5. Develop the standardised covenants that will form the backbone of the last-mile business in future.
  6. Offer a Credit Guarantee scheme for providing guarantees to loans being offered to micro businesses.
  7. Introduce appropriate technologies to assist in the process of efficient lending, borrowing and monitoring of distributed capital.
  8. Build a suitable framework under the Pradhan Mantri MUDRA Yojana for developing an efficient last-mile credit delivery system to small and micro businesses.

Major Product Offerings

MUDRA Bank has rightly classified the borrowers into three segments: the starters, the mid-stage finance seekers and the next level growth seekers.
To address the three segments, MUDRA Bank has launched three loan instruments:
  1. Shishu: covers loans upto Rs 50,000/-
  2. Kishor: covers loans above Rs 50,000/- and upto Rs 5 lakh
  3. Tarun: covers loans above Rs 5 lakh and upto Rs 10 lakh
Initially, sector-specific schemes will be confined to “Land Transport, Community, Social & Personal Services, Food Product and Textile Product sectors”. Over a period of time, new schemes will be launched to encompass more sectors.
MUDRA operates as a refinancing institution through State/Regional level intermediaries. It refinances NBFCs/MFIs and also banks, primary lending institutions etc.

Some of the Offerings Planned for the Future:

  1. MUDRA Card
  2. Portfolio Credit Guarantee
  3. Credit Enhancement
Mudra Loan Mela
The government is organising MUDRA loan melas in different parts of the country. These melas are organised for few days where loans for small business funding could be applied.  In the melas, loans are granted ranging from Rs. 50,000 to Rs. 10 lakh.
To know more about the process of loan you can contact the Nodal officer of your area. http://www.mudra.org.in/Nodal-Officers-MUDRA.pdf

Can MUDRA Really Be a Game Changer for India?

Yes it can. See the existing demographics. Majority of Indians are poor and live in rural and interior parts of India. Most are excluded from getting facilities that would be termed very basic, even by Indian standards.
Most people do not have access to farmland and in the absence of jobs, are left to their own creativity to feed themselves and survive. They figure out ways to do odd jobs in exchange of money or barter their services. Most of these people belong to scheduled castes, scheduled tribes and other backward classes. It is to be noted that most of the micro enterprises, retail or trading activity, are initiated and controlled by women, with no exposure to education, formal training or access to any form of banking support.
Now visualise this. If India could harness this free spirit of enterprise and offer some guidance, support, training and financial assistance, the potential to get an immediate jump in GDP is there for the asking. Narendra Modi recognises this and was clear of the potential of this low-hanging fruit.
If MUDRA can continue to retain focus on the underprivileged and extend its reach to the interiors, it can well emerge as a bigger success story than what Grameen Bank of Bangladesh ever was or will be.
There is an old saying that goes like this: “Give a man a fish you feed him for a day, teach him how to fish and he will never go hungry”. MUDRA Bank is a step by the government that can be a game changer in giving birth to a new set of entrepreneurs, some of whom may scale heights not imagined today. This is far better than giving subsidy, which may seem welcoming at first, but does little to help an individual strive for a better life. MUDRA is the way to go.
The modalities of functioning of MUDRA Bank are in place and it has been decided that the funding activity will be carried out by microfinance institutions. However, the small businesses have to wait to get full information on Mudra Bank and have a clarity on who all are eligible for loans and how to get the benefits of this scheme.
Contact Details:
Registered Office
Sidbi, ground floor, Videocon Tower,
Jhandewalan Extension,
E-1, Rani Jhansi Road,
New Delhi – 110055
Corporate Office
MSME Development Centre,
C-11, g-block, Bandra Kurla Complex,
Bandra East, Mumbai – 400 051
Contact list of MUDRA officers: 


Eligibility Criteria / Documents required for MUDRA Loan
1. Proof of identity – Self certified copy of Voter’s ID card / Driving License / PAN Card / Aadhar Card/Passport.
2. Proof of residence – Recent telephone bill, electricity bill, property tax receipt (not older than 2 months), Voter’s ID card, Aadhar Card & Passport of Proprietor/Partners/Directors.
3. Proof of SC/ST/OBC/Minority.
4. Proof of Identity/Address of the Business Enterprise -Copies of relevant licenses/registration certificates/other documents pertaining to the ownership, identity and address of business unit.
5. Applicant should not be defaulter in any Bank/Financial institution.
6. Statement of accounts (for the last six months), from the existing banker, if any.
7. Last two years balance sheets of the units along with income tax/sales tax return etc. (Applicable for all cases from Rs.2 Lacs and above).
8. Projected balance sheets for one year in case of working capital limits and for the period of the loan in case of term loan (Applicable for all cases from Rs.2 Lacs and above).
9. Sales achieved during the current financial year up to the date of submission of application.
10. Project report (for the proposed project) containing details of technical & economic viability.
11. Memorandum and articles of association of the company/Partnership Deed of Partners etc.
12. In absence of third party guarantee, Asset & Liability statement from the borrower including Directors& Partners may be sought to know the net-worth.
13. Photographs (two copies) of Proprietor/ Partners/ Directors.

Recent Developments

  • On 4 July, the Corporation Bank launched the first MUDRA card under the Pradhan Mantri Mudra Yojana (PMMY).
  • On 1 July, IDBI aigned an agreement with MUDRA for refinancing of loans.
  • Hasmukh Adhia, union financial service secretary said that Mudra Bank will be first set up as a subsidiary of the Small Industries Development Bank of India and later will be converted to a full-fledged bank through an Act of Parliament. Adhia made this announcement during a ‘roundtable on financing of innovations’ which was attended by chiefs of banks and financial institutions, and also the President of India. Although Adhia did not disclose the details about the set up of Mudra Bank, he said that the Prime Minister will launch it soon.
  • MUDRA bank has join hands with 19 state and regional level coordinators so as to reach the small entrepreneurs who have limited branch presence and are cut off from the general banking system. The initiative taken by the government is expected to be helpful for the small and micro businesses. It is also expected that these businesses will generate 10 times more number of jobs which are normally generated by the big business firms/companies at present.

State wise Disbursement report of PMMY for the FY-2015/16 as on Oct 28, 2015.

[Amount Rs. in Crore]
Sr NoBank Type NameBank NameShishu
(Loans up to Rs. 50,000)
(Loans from Rs. 50,001 to Rs. 5.00 Lakh)
(Loans from Rs. 5.00 to Rs. 10.00 Lakh)
No Of A/CsDisbursement AmtNo Of A/CsDisbursement AmtNo Of A/CsDisbursement AmtNo Of A/CsDisbursement Amt
1NBFC-Micro Finance Institutions
1.1BSS Microfinance99832215.0800.0000.0099832215.08
2SBI and Associates
2.1State Bank of India430552253.1933878890.8013013893.544774432037.53
2.2State Bank of Bikaner and Jaipur1912444.78354193.331726126.8524391264.96
2.3State Bank of Hyderabad4668964.7413141289.553134265.6262964619.91
2.4State Bank of Mysore1510916.608719199.712355193.2026183409.51
2.5State Bank of Patiala1219231.873479103.521698144.6717369280.06
2.6State Bank of Travancore28618.94228956.9794574.416095140.32
3Public Sector Commercial Banks
3.1Allahabad Bank88138109.7620925364.003226209.32112289683.08
3.2Andhra Bank101281154.1316046256.951608121.19118935532.27
3.3Bank of Baroda129457177.6323771439.833548289.49156776906.95
3.4Bank of India258746356.3527847511.184994325.472915871193.00
3.5Bank of Maharashtra1808945.5715260272.284182266.1237531583.97
3.6Canara Bank229427504.851235532501.84196141520.293725944526.98
3.7Central Bank of India116358104.1313393250.342980207.06132731561.53
3.8Corporation Bank86941202.8127959341.482928158.85117828703.14
3.9Dena Bank5717930.525815101.48101567.0264009199.02
3.10Indian Bank181374161.4316982352.202310165.67200666679.30
3.11Indian Overseas Bank80691112.0921723335.661782113.31104196561.06
3.12Oriental Bank of Commerce5654280.816112156.682260178.6464914416.13
3.13Punjab National Bank176734212.6928802478.106220338.932117561029.72
3.14Syndicate Bank169330155.3446751849.876289391.812223701397.02
3.15Union Bank of India87772170.4430530441.122386117.17120688728.73
3.16United Bank of India5068755.6214498266.711861138.4467046460.77
3.17Punjab & Sind Bank1789254.33351273.85145793.3222861221.50
3.18UCO Bank454394524.7229979466.942944216.754873171208.41
3.19Vijaya Bank45271167.4324590447.385091353.7874952968.59
3.20IDBI Bank Limited73841143.4010230261.983580271.8187651677.19
3.21Bharatiya Mahila Bank369010.881813.76473.43391818.07
4Private Sector Commercial Banks
4.1Catholic Syrian Bank830.201082.50221.842134.54
4.2Federal Bank2150.6274113.1829820.02125433.82
4.3Jammu & Kashmir Bank29067.528896168.4191262.0012714237.93
4.4Karnataka Bank8342.92353468.08104064.495408135.49
4.5Karur Vysya Bank1970.41168350.831460103.133340154.37
4.6City Union Bank810.2969022.2555748.60132871.14
4.7Lakshmi Vilas Bank3631.3095015.7826515.32157832.40
4.8Ratnakar Bank3331466.5872524.3530726.2934346117.22
4.9South Indian Bank4291.32139837.6788069.792707108.78
4.10ICICI Bank842814.9219638670.45147461038.35428121723.72
4.11Axis Bank182177328.15332595.7749342.29185995466.21
4.12IndusInd Bank4674321107.2737999536.403526215.775089571859.44
4.13Yes Bank35437.856480146.5532423.5910347177.99
4.14HDFC Bank5116581057.12560801423.07157961074.445835343554.63
4.15DCB Bank360.1038013.5637329.0478942.70
4.16Kotak Mahindra Bank00.0043416.0467753.60111169.64
5Foreign Banks
5.2Standard Chartered Bank00.0000.0080.7280.72
6Regional Rural Banks
6.1Andhra Pradesh Grameena Vikas Bank1575568.72145717.82302.591724289.13
6.2Chairman, Andhra Pragathi Grameena Bank2435348.02563058.14181.3330001107.49
6.3Chaitanya Godavari Grameena Bank856531.94167617.3640.251024549.55
6.4Chairman, Telangana Grameena Bank601824.805238100.851087.7211364133.37
6.5Chairman, Saptagiri Grameena Bank449913.6011354436.23907.8715943457.70
6.6Assam Gramin Vikash Bank1109928.61282853.34816.361400888.31
6.7Langpi Dehangi Rural Bank3660.68621.3620.104302.14
6.8Arunachal Pradesh Rural Bank1991.001234.36534.313759.67
6.9Uttar Bihar Gramin Bank86253117.0435267541.6635926.77121879685.47
6.10Madhya Bihar Gramin Bank28982128.215827248.3320816.4835017393.02
6.11Bihar Gramin Bank18056.6980417.58755.84268430.11
6.12Chattisgarh Rajya Gramin Bank830522.46282626.39201.451115150.30
6.13Dena Gujarat Gramin Bank80217.3290916.72382.81896826.85
6.14Baroda Gujarat Gramin Bank30556.7682010.73151.28389018.77
6.15Saurashtra Gramin Bank16693.5483311.35705.73257220.62
6.16Sarva Haryana Gramin Bank22237.2093710.90553.31321521.41
6.17Himachal Pradesh Gramin Bank14747.03109528.47746.16264341.66
6.18Jharkhand Gramin Bank795216.4482214.69422.70881633.83
6.19Vananchal Gramin Bank871733.56183230.93989.161064773.65
6.20Jammu And Kashmir Grameen Bank3691.64166837.9613310.03217049.63
6.21Ellaquai Dehati Bank2521.2269915.09673.70101820.01
6.22Kaveri Grameena Bank1284417.53269135.11947.511562960.15
6.23Karnataka Vikas Grameena Bank2168784.8427224409.9136829.2349279523.98
6.24Pragathi Krishna Gramin Bank65356271.488228198.2295767.0074541536.70
6.25Kerala Gramin Bank3109083.2315855282.3735131.8147296397.41
6.26Maharashtra Gramin Bank12684.83260553.0427523.19414881.06
6.27Vidharbha Konkan Gramin Bank647315.38111518.54614.44764938.36
6.28Narmada Jhabua Gramin Bank1763329.66208136.191429.731985675.58
6.29Central Madhya Pradesh Gramin Bank596517.644236.81987.15648631.60
6.30Madhyanchal Gramin Bank957919.42178931.63564.021142455.07
6.31Manipur Rural Bank7783.121912.7460.469756.32
6.32Meghalaya Rural Bank10613.5697724.48957.96213336.00
6.33Mizoram Rural Bank14876.322614.7970.55175511.66
6.34Nagaland Rural Bank1150.30361.1240.311551.73
6.35Odisha Gramya Bank422916.91147014.271235.03582236.21
6.36Utkal Grameen Bank6482.422495.65291.9592610.02
6.37Punjab Gramin Bank625519.602023.64151.18647224.42
6.38Malwa Gramin Bank8661.08210.3910.098881.56
6.39Sutlej Gramin Bank2890.73130.2230.263051.21
6.40Puduvai Bharathiar Grama Bank20344.011261.9240.3021646.23
6.41Baroda Rajasthan Ksethriya Gramin Bank3161421.15135419.62867.713305448.48
6.42Marudhara Rajasthan Gramin Bank1912739.09891.1960.271922240.55
6.43Pandyan Grama Bank353310.99109310.09221.68464822.76
6.44Pallavan Grama Bank2200018.43230549.36836.032438873.82
6.45Tripura Gramin Bank904024.0298118.14947.781011549.94
6.46Allahabad UP Gramin Bank220657.815478.76392.392265118.96
6.47Baroda UP Gramin Bank3414426.1597819.231457.603526752.98
6.48Gramin Bank Of Aryavrat1710239.79196829.951227.411919277.15
6.49Kashi Gomti Samyut Gramin Bank985837.284079.50705.481033552.26
6.50Prathama Bank774624.07322161.8139032.8211357118.70
6.51Purvanchal Bank570719.0257918.772098.67649546.46
6.52Sarva UP Gramin Bank530819.382142.6630.15552522.19
6.53Uttarakhand Gramin Bank6272.55171745.0520915.13255362.73
6.54Bangiya Gramin Vikash Bank682822.20547992.4521414.9212521129.57
6.55Paschim Banga Gramin Bank1102339.626352133.3635625.0217731198.00
6.56Uttarbanga Kshetriya Gramin Bank23736.32393236.69106726.63737269.64
Grand Total49495728303.1189624617505.9515238910638.41599820736447.47

For further information on Mudra Bank, please log onto: http://www.mudra.org.in



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