by The Micro Units Development and Refinance Agency (MUDRA) scheme was launched by the Government of India on April 8, 2015, with the aim of promoting entrepreneurship and providing credit facilities to micro and small enterprises in India. The scheme operates through various financial institutions and banks and provides financial assistance to those who want to set up small businesses in various sectors.
The main objective of the MUDRA scheme is to provide credit to small business owners who do not have access to traditional bank loans. The scheme aims to provide easy credit to micro and small businesses, including small manufacturing units, shopkeepers, street vendors, artisans, and self-employed individuals. The scheme also aims to promote entrepreneurship among women and weaker sections of society.
MUDRA offers three types of loans:
- Shishu loan: This loan is for small business owners who are just starting out and need a small amount of capital to get their business up and running. The loan amount ranges from Rs. 50,000 to Rs. 1,00,000.
- Kishor loan: This loan is for businesses that are a little more established and need a larger amount of capital to grow. The loan amount ranges from Rs. 1,00,000 to Rs. 5,00,000.
- Tarun loan: This loan is for businesses that are well-established and need a large amount of capital to expand. The loan amount ranges from Rs. 5,00,000 to Rs. 10,00,000.
MUDRA loans are collateral-free, which means that borrowers do not need to provide any security or collateral to avail of the loan. The interest rates for these loans are also very low compared to traditional bank loans. The repayment period for these loans ranges from one to five years, depending on the type of loan.
The MUDRA scheme operates through various financial institutions and banks, including public sector banks, private sector banks, regional rural banks, and microfinance institutions. The loans are provided through these institutions, which act as intermediaries between the borrower and the government.
The MUDRA scheme has been successful in promoting entrepreneurship and providing credit facilities to micro and small businesses in India. According to the Ministry of Finance, over 6 crore MUDRA loans have been disbursed since the scheme was launched in 2015. These loans have provided financial assistance to over 12 crore individuals, of which over 70% are women and over 50% are from the weaker sections of society.
However, the MUDRA scheme has also faced some criticism. Some experts have raised concerns about the high number of non-performing assets (NPAs) in the MUDRA loan portfolio. According to a report by the Comptroller and Auditor General (CAG) of India, the NPAs in the MUDRA loan portfolio increased from 5.38% in March 2018 to 6.84% in March 2019. The report also highlighted issues related to loan disbursement, monitoring, and recovery.
