 "Naveen for MUDRA Bank headquarters in Odisha")
In a recent letter to Prime Minister Narendra Modi after the launch of MUDRA Bank, Patnaik said since none of the public sector banks has its headquarter in the state, MUDRA Bank's base need to be set up here.
MUDRA Bank would be responsible for regulating and refinancing the micro finance institutions (MFIs) which are in the business of lending to micro or small business entities engaged in manufacturing, trading and services activities.
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However, since the interest charged on loans by MUDRA Bank is proposed to be higher than the base rate of banks, Patnaik has urged Modi to make provision for interest subvention to address the anxiety of small entrepreneurs.
The proposal for having the headquarter of MUDRA Bank in Bhubaneswar was conceptualised by the state MSME (micro, small & medium enterprises) department.
"The department is taking a lot of initiatives to nurture entrepreneurship and ensure that the entrepreneurs get adequate credit support. Having the headquarter of MUDRA Bank here would go a long way in addressing this issue," said a top official at the MSME department.
The Government of India has proposed to set up MUDRA Bank through a statutory enactment.
A sum of Rs 20,000 crore would be allocated to the MUDRA Bank from the money available from shortfalls of priority sector lending for creating fund to provide refinance to the last mile financiers. Besides this, Rs 3,000 crore would be provided to the MUDRA Bank from the budget to create a credit guarantee corpus for guaranteeing loans being provided to the micro enterprises. In lending, priority will be given to SC/ST entrepreneurs.
The MUDRA Bank is expected to not only help in increasing access of finance to the un-banked but also bring down the cost of finance from the last mile financiers to the micro/small enterprises, most of which are in the informal sector.
The bank would be primarily responsible for laying down policy guidelines for micro/small enterprise financing business, registration of MFI entities, regulaation of MFI entities, accreditation /rating of MFI entities, laying down responsible financing practices to ward off indebtedness and ensure proper client protection principles and methods of recovery development of standardised set of covenants governing last mile lending to micro/small enterprises and promoting right technology solutions for the last mile.