MUDRA Not a small deal for small businesses
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.