The Indian Government introduced Micro Units Development and Refinance Agency (or, the Mudra Scheme), to finance loans up to Rs. 10 Lakh to small borrowers through financial lending institutions. India’s finance ministry now plans to revamp the flagship lending scheme, to ensure improved access of Pradhan Mantri Mudra Loan to boost entrepreneurship and also promote financial inclusion.
The finance ministry announced that they plan to revamp this Mudra scheme as they have witnessed an increased footfall into availing this loan scheme and also to ensure that such advances do not face any defaults. The Indian Government has announced this loan scheme for around 57 million non-farm and micro-enterprises – sectors that generate maximum employment in the country. At a time when the nation is tackling a slowdown, better access to credits also creates more job opportunities and promotes entrepreneurship.
What is MUDRA loan scheme?
MUDRA (Micro-Units Development and Refinance Agency) loan scheme is a flagship initiative of the Indian Government to boost the growth of MSMEs nationwide. Also known as the Pradhan Mantri Mudra Loan, this fund scheme gained momentum under the Make in India campaign. Under this loan scheme, advances of minimum Rs. 50000 and maximum to Rs. 10 Lakh will be provided to the start-ups and other small business units. These MUDRA loans will help the nation’s micro and small business units to expand their business and manage the operational needs through easy-to-avail finance schemes. It will help them organise business finance more efficiently.
Why was MUDRA scheme launched?
MUDRA has partnered with the nation’s myriad of regional and state-level financial institutions and MFIs (Microfinance Institutions) in addition to other lending authorities. Through these sources of business finance, the Government aims to ensure that adequate credit facility is offered to new entrepreneurs. This revolutionary ‘Fund the Unfunded’ step focuses on assisting the neglected section of the Indian population to become self-dependent and self-reliant.
However, a business owner should check his/her eligibility criteria using a loan eligibility calculator from their preferred lender. He/she must also be aware of the documents required to apply for business loans. This process also ensures that business owners do not need to rely on private moneylenders and personal networks as their sources of business finance.
As per a survey, more than 16 Crore entrepreneurs have already availed credits under the Pradhan Mantri Mudra Yojana. Now, the finance ministry has taken the next step to expand this initiative further to take the number of beneficiaries of MUDRA scheme up to 30 Crore by the year 2022. Within the financial year 2018-19, a total loan amount of Rs. 3.11 trillion has been disbursed, an Rs. 1.46 trillion increase from last year. According to a source, 6.56 million advances worth over Rs. 32000 Crore has already been disbursed since 1st April 2019, as per the updated data on 15th June 2019.
Currently, over 65 financial institutions, 25 MFIs and 16 NBFCs have been enrolled under MUDRA scheme. With Pradhan Mantri Mudra Loan assistance, the purpose of providing working capital to small firms is getting a fresh boost. Now, as the country’s finance ministry is revamping the scheme, more MSME owners will benefit from this flagship scheme.