Is It a Bank?
It is important to know that MUDRA is not a direct lending institution. It provides refinance support to intermediaries who are in the business of lending for income-generating activities in the nonfarm sector. Specifically, MUDRA is responsible for refinancing all last-mile financiers such as NBFCs, societies, trusts, Section 8 companies (formerly Section 25), co-operative societies, small banks, scheduled commercial banks, and regional rural banks that are engaged in lending to micro/small business entities engaged in manufacturing, trading and services activities. MUDRA may also partner with state/regional-level financial intermediaries. Banks and MFIs can draw refinance under the scheme after becoming member-lending institutions (MLIs) of MUDRA. MUDRA Bank is being set up through a statutory enactment and it will be responsible for developing and refinancing through the Pradhan Mantri MUDRA Yojana (PMMY). MUDRA will act as a regulator of all microfinance institutions. Pending enactment of an act for MUDRA Bank, a non-banking financial company as MUDRA Ltd has been set up as a subsidiary of Small Industries Development Bank of India (SIDBI).