Pradhan Mantri MUDRA Yojana (PMMY)
The main idea of the Mudra Yojana was organized, initiated, and set up by Prime Minister Narendra Modi.
Pradhan Mantri MUDRA Yojana (PMMY)
The main idea of the Mudra Yojana was organized, initiated, and set up by Prime Minister Narendra Modi.
On 8th April 2015, Prime Minister Modi launched the MUDRA scheme, which is Micro Unit Development and Refinance Agency. This scheme was launched to uplift entrepreneurs and small businesses of Micro Small Medium Enterprises (MSME). According to the project, the Mudra Bank will provide low rates loans to a microfinance institution (MFI) which in turn will offer the credit to MSME.
The primary mission of this scheme is to deliver loans of up to ten lakhs to micro-enterprises which the performed by NSSO in 2013 were 5.77 crores in number. Small finance banks, cooperative banks, non-banking financial companies (NBFCs), MFIs, and commercial banks provide these loans.
The three types of loans that are sanctioned under this Yojana are i. Shishu loan which provides loans up to fifty thousand rupees, ii. Kishore loan which offers loans starting from fifty thousand rupees up to five lakh rupees and iii. Tarun loan which provides loan starts from above five lakh rupees up to 10 lakh rupees. The interventions have been named ‘Shishu’, ‘Kishore’, and ‘Tarun’ to denote the growth or development and funding needs of the beneficiary entrepreneur or units. These names also provide a reference point for the next face of progress to which they can look forward. The loan under PMMY has no subsidy; however, if the loan application is linked with any government scheme, in which the government is granting capital subsidy, it will be qualified under PMMY also.
Any individual who has Indian Citizenship can apply for this scheme if he has a business plan for a non-farm sector income engendering activity like processing, trading, manufacturing, or service sector and whose need of credit is lower than 10 lakh rupees. An individual can directly approach an MFI, NBFC, or Bank for availing of MUDRA loans under Prime Minister Mudra Yojana (PMMY).
Individuals who want to avail assistance under Pradhan Mantri Mudra Yojana can visit their local branch of any of the financial institutions present in their regions like Regional Rural Banks and Cooperative banks, PSU banks, Foreign banks, MFIs, NBFC, and Private sector banks. Assistance with the approval of the loan shall be as per the eligibility criteria of the respective lending institutions.
The significant benefit of this Yojana is that it is an excellent device for job formation as Prime Minister Mudra Yojana created about 5.5 crore jobs. Other benefits of the Yojana are the development of the economy, reduction in regional imbalance, the industrialization of rural areas, and certified equitable distribution of national income.
Advantages
- The Mudra loan plan offers credit to minor and little endeavors occupied with salary generation.
- One of the key advantages of a Mudra credit is that borrowers are not required to give security or insurance. Moreover, there are no preparing charges for Mudra loans.
- The credit reached out under the PMMY can be for a store or non-subsidize-based necessities. Henceforth, borrowers can utilize the Mudra loan plan for multiple purposes. The credit from Mudra loans can be utilized for term loans and overdraft facilities, or to apply for letters of credit and bank ensures.
- There is no base credit sum for Mudra loans.
The Motivation Behind MUDRA Loan
Mudra loan is stretched out for an assortment of purposes which result in business creation. The credits are expanded fundamentally for:
- Business loan for other Service Sector activities
- A working capital loan through MUDRA Cards
- Gear Finance for Micro Units
- Transport Vehicle loans – for business utilize as it were
- Loans for agri-united non-agricultural salary-producing activities, for example, pisciculture, honey beekeeping, poultry cultivating, and so forth.
- Tractors, and tillers just like bikes utilized for business purposes as it were.
Documents required
- Duly filled application form with recent passport size photographs
- KYC documents of the applicant, such as Passport, Aadhar card, PAN card, Voter ID card, Driving License, Birth Certificate, Utility Bills (Water & Electricity)
- Proof of belonging to special categories, such as SC/ST/OBC/Minority, etc.
- Business incorporation certificate, if applicable
- Business address proof
- Last 6 months’ bank statement
- Any other document required by the bank/NBFC
Individuals who want to avail assistance under Pradhan Mantri Mudra Yojana can visit their local branch of any of the financial institutions present in their regions like Regional Rural Banks and Cooperative banks, PSU banks, Foreign banks, MFIs, NBFC, and Private sector banks. Assistance with the approval of the loan shall be as per the eligibility criteria of the respective lending institutions.
The significant benefit of this Yojana is that it is an excellent device for job formation as Prime Minister Mudra Yojana created about 5.5 crore jobs. Other benefits of the Yojana are the development of the economy, reduction in regional imbalance, the industrialization of rural areas, and certified equitable distribution of national income. The challenges which came in the way of Mudra were problems like fraudulent loans, low financial literacy, lack of market development, Bank NPA, delay in processing, and poor grievance redressal.
Mudra Yojana is a practical step toward the development of the country’s economy and enhancing income generation in the country. The Revolutionary change in the zone of microfinance also took place due to the Yojana. The scheme was introduced to help the low-income group, the unfunded population, and the weaker section of the country, and it is successfully doing so.
Pradhan Mantri Mudra Yojana known as just Mudra Yojana is one of the most substantial endeavors of Prime Minister Narendra Modi to provide banking facilities to the unbanked population. To make the neglected section of the community self-dependent and self-reliant, Prime Minister Modi always highlighted the significance of bringing the unbanked people under mainstream banking.
MUDRA implies Micro Units Development and Reliance Agency. After the success of PM Jan Dhan Yojana, this scheme was introduced. As the population which is engaged in small businesses always needs microfinance to help their business and also their daily business needs, PM Mudra Bank Yojana provides them in facilitating micro credit up to ten lakh rupees.
Borrowers will have to repay the loans taken in a freehold ranging from five to seven years. PM Mudra already has an amount of more than seventy thousand crore rupees, and this amount would be a great help in increasing the overall output and creating newer job opportunities.
10 Lines on Mudra Yojana Essay in English
- Mudra Yojana was introduced by Prime Minister Narendra Modi so that entrepreneurs and small business owners could be included in mainstream banking if they need loans.
- It is said that about fifty-eight million small business owners have benefitted from the Pradhan Mantri Mudra Yojana.
- PMMY has helped in changing the trend of mainstream banking in which banks only provide loans to secure businesses which later pay back with higher interests.
- PMMY has helped many young and budding entrepreneurs by delivering institutional finance which was unavailable due to inadequate corpus and unorganized management of credit facilities.
- PMMY has helped both financial institutions and needy small business owners come on a single platform.
- This scheme also resolved the central concern of financial institutions which is repayment due to which they could not provide finance to small business owners.
- The interest rates of Mudra Loans are not fixed, and it depends on the type of borrower’s business, and the bank as each bank has its criteria.
- There is no formal way to apply for PMMY as one must approach the banks, MFIs, or NBFCs and give them a detailed description of their businesses.
- One must be a citizen of India to avail of the Mudra Yojana.
- The Mudra loan is issued through a Mudra credit card with a pre-assigned credit limit.
Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Hon’ble Prime Minister on April 8, 2015, for providing loans up to 10 lakh to the non-corporate, non-farm small/micro-enterprises. These loans are classified as MUDRA loans under PMMY. These loans are given by Commercial Banks, RRBs, Small Finance Banks, Cooperative Banks, MFIs, and NBFCs. The borrower can approach any of the lending institutions mentioned above or can apply online through this portal. Under the aegis of PMMY, MUDRA has created three products namely ‘Shishu’, ‘Kishore’, and ‘Tarun’ to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur and also provide a reference point for the next phase of graduation/growth.
The Union Budget presented by the Hon’ble Finance Minister Shri Arun Jaitley, for FY 2015-16, announced the formation of MUDRA Bank. Accordingly, MUDRA was registered as a Company in March 2015 under the Companies Act 2013 and as a Non-Banking Finance Institution with the RBI on 07 April 2015. MUDRA was launched by the Honourable Prime Minister Shri Narendra Modi on 08 April 2015 at a function held at Vigyan Bhawan, New Delhi. (MUDRA) Bank was set through a statutory enactment. This Bank would be responsible for regulating and refinancing all Micro-finance Institutions (MFI) which are in the business of lending to micro/small business entities engaged in manufacturing, trading, and services activities. The Bank would partner with state-level/regional-level co-ordinators to provide finance to Last Mile Financier of small/micro business enterprises.
Micro enterprises constitute a major economic segment in our country and provide large employment after agriculture. This segment includes micro-units engaged in the manufacturing, processing, trading, and services sector. It provides employment to nearly 10 crore people. Many of these units are proprietary/ single ownership or Own Account enterprises and many a time referred to as Non-Corporate Small Business sector.
Formal or institutional architecture has not been able to reach out to them to meet the financial requirements of this sector. They are largely self-financed or rely on personal networks or moneylenders. Addressing this need will give a big boost to the economy otherwise this segment would remain unfunded and a portion of the productive labor force would remain unemployed.
Small business is big business. According to NSSO Survey (2013), there are 5.77 crore small business units, mostly individual proprietorships. Most of these ‘own account enterprises’ (OAE) are owned by people belonging to Scheduled Caste, Scheduled Tribe, or Other Backward Classes. They get very little credit, and that too mostly from nonformal lenders, or friends and relatives. Providing access to institutional finance to such micro/small business units would turn them into strong instruments of GDP growth and also employment. Mainstreaming these enterprises will not only help in improving the quality of life of these entrepreneurs but will also contribute substantially to job creation in the economy thereby achieving higher GDP growth.
In the above backdrop, the Micro Units Development & Refinance Agency Ltd (MUDRA) was set up by the Government of India (GoI). MUDRA has been initially formed as a wholly-owned subsidiary of the Small Industries Development Bank of India (SIDBI) with 100% capital being contributed by it. Presently, the authorized capital of MUDRA is 1000 crores, and the paid-up capital is 750 crore, fully subscribed by SIDBI. More capital is expected to enhance the functioning of MUDRA.
This Agency would be responsible for developing and refinancing all Micro-enterprises sectors by supporting the finance Institutions which are in the business of lending to micro / small business entities engaged in manufacturing, trading, and service activities. MUDRA would partner with Banks, MFIs, and other lending institutions at the state level / regional level to provide micro-finance support to the micro-enterprise sector in the country
