|Posted on 12 June, 2015 at 2:45|
Prime motive of launching the Mudra Bank is to benefit small entrepreneurs and also to act as a regulator for 'Micro-Finance Institutions (MFIs).
The roles envisaged for MUDRA include laying down policy guidelines for micro enterprise financing business and registration of MFI entities as well as their accreditation and rating.
Here are 5 things you must know about Mudra Bank and how it will benefit you:
What is Mudra Bank?
Since micro and small entrepreneurs own businesses that are often “cut-off” from the banking system because of limited branch presence, Mudra Bank will partner with local coordinators and provide finance to "Last Mile Financiers" of small/micro businesses.
Who are the targets?
As per the Finance Ministry, measures to be taken up by MUDRA BANK are targeted towards bringing into the financial mainstream the young, educated or skilled workers and entrepreneurs including women entrepreneurs.
The bank will cater to 5.77 crore, micro and small business units that are spread across the country who currently have difficulty in accessing credit from the regular banking system.
What is the Recovery method?
Mudra Bank will ensure clients are properly protected and will lay down principles and methods of loan recovery in case of a default. The Bank will also ensure that the borrowers and itself will rigidly follow "responsible financing practices" to deter borrowers from indebtedness.
What is the Corpus?
The Bank will be set up with a corpus of Rs 20,000 crore and a credit guarantee fund of Rs 3,000 crore.
What are the different stages Mudra Bank will nurture?
The Bank will nurture small businesses through different stages of growth and development of businesses as below;
This the stage when the business is just starting up. The loan cover at this stage shall be upto Rs 50,000.
This is the growth phase of the business and at this stage, the entreprenuer shall be eligible for a loan ranging from Rs 50,000 to Rs 5 lakh.
This is the phase of stabilising the business and at the stage entrepreneurs shall be provided loans for upto Rs 10 lakh.