MUDRA Not a small deal for small busi­nesses

Consumer Voice - - Contents -

It pur­ports to be what its name says it is – Mi­cro Units De­vel­op­ment Re­fi­nance Agency, or MUDRA. Set up by the govern­ment of In­dia to fi­nan­cially sup­port small busi­ness units, it also has a catch­phrase: The ob­jec­tive is to bring small en­ter­prises into the for­mal fi­nan­cial sys­tem and ex­tend af­ford­able credit to them. How so? What pre­cisely is the sup­port pro­vided and who all stand to ben­e­fit? If you are a po­ten­tial ben­e­fi­ciary, what must you know to avail of the scheme?

Thanks to MUDRA, it is now the­o­ret­i­cally pos­si­ble for a non-cor­po­rate small busi­ness (NCSB) to bor­row from pub­lic sec­tor and pri­vate sec­tor banks, for­eign banks, mi­cro­fi­nance in­sti­tu­tions (MFI), and non-bank­ing fi­nan­cial com­pa­nies (NBFC) loans up to Rs 10 lakhs for in­come-gen­er­at­ing ac­tiv­i­ties in the non-farm seg­ment. Launched in April last year with a cor­pus of Rs 20,000 crore, MUDRA fa­cil­i­tates col­lat­eral-free fi­nan­cial aid to small and medium en­ter­prise en­ti­ties who may oth­er­wise find it dif­fi­cult to get credit/loan/funds through the ex­ist­ing ar­ray of fi­nan­cial in­sti­tu­tions.

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