Union Minister Kalraj Mishra today said Mudra Bank will help small enterprises access loans at cheaper rate.
"The interest charged on loans is higher than the base rate of banks, causing anxiety to small entrepreneurs. We will have to make provision for subsidy to address this issue. Perhaps MUDRA was announced in Budget with this objective... The aim is to provide loans at cheaper rates to those running small enterprises," Union MSME Minister Kalraj Mishra said.
Micro Units Development and Refinance Agency (Mudra) Bank as proposed in the Budget by Finance Minister Arun Jaitley will be providing access to institutional Finance to micro or small business units and act as a regulator for microfinance institutions (MFIs).
The government proposes to set up Mudra Bank through a statutory enactment. This bank would be responsible for regulating and refinancing all MFIs which are in the business of lending to micro or small business entities engaged in manufacturing, trading and services activities.
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 a refinance fund to provide refinance to the last mile financiers.
Another 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.
Prime Minister Narendra Modi will launch on April 8 the Rs 20,000 crore MUDRA Bank, an agency to refinance micro-finance institutions which will also act as regulator for the sector.
The bank would partner with state level/regional level coordinators to provide finance to last mile financier of small/micro business enterprises.
Mudra Bank would primarily be responsible for laying down policy guidelines for micro/small enterprise financing business, registration of MFI entities, regulation 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.
It would also responsible for development of standardised set of covenants governing last mile lending to micro/small enterprises, promoting right technology solutions for the last mile, formulating and running a Credit Guarantee scheme for providing guarantees to the loans which are being extended to micro enterprises and creating a good architecture of Last Mile Credit Delivery to micro businesses under the scheme of Pradhan Mantri Mudra Yojana.
