Context: Recently Prime Minister MUDRA (Micro Units Development Refinance Agency) Yojana completed 8 years. Reports say that 83% of loans given under the scheme were under Rs. 50000.
About PM MUDRA Yojana
- The scheme aimed to provide loans up to 10 lacks to non-corporate, non-farm small/micro enterprises.
- Under the aegis of PMMY, MUDRA has created three products namely ‘
1. ‘Shishu’ covers loans upto Rs. 50000
2. ‘Kishore’ covers loans above Rs. 50000 and upto Rs. 5 lakhs
3. ‘Tarun’ Covers loans Above 5 lakhs and upto 10 lakhs
- These loans are given by Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs.
- MUDRA Bank is nodal agency to implement the scheme
What is MUDRA Bank?
- It is a refinancing institution and regulator for micro-finance institutions.
- It would be in charge of developing and refinancing the micro-enterprise sector by assisting finance institutions that lend to micro/small business entities engaged in manufacturing, trading, and service activities.
- It would collaborate with banks, microfinance institutions, and other lending institutions at the state and regional levels to provide microfinance support to the country’s microenterprise sector.
Achievements under PM MUDRA Yojana
- A total of 60827414 beneficiaries have taken the loan up to the financial year 2022-23
- A total of Rs. 442296.46 Crore have been disbursed upto the financial house 2022-23
Limitations of MUDRA Yojana
- There are a number of already existing refinancing agencies
- There is a potential conflict of interest due to the nature of the roles and responsibilities of Mudra Bank.
- Mudra Bank seems to promote shadow banking.
- There is a better solution to finance micro and small businesses in the form of Microfinance institutions
- It will lead to an increase in the number of regulators for MFIs
