Non-banking financial companies (NBFCs) still have a long way to go to achieve the scale of commercial banks in Mudra loans, but they’re growing swiftly in sanctioning these small loans for businesses, official data showed.
According to the 2017-18 annual report of Pradhan Mantri Mudra Yojana (PMMY), though NBFCs sanctioned only over ₹27,000 crore of Mudra loans in FY18 against ₹92,492.68 crore by public sector banks, their year-on-year growth was faster. While NBFC Mudra loan sanctions increased ₹21,562.63 crore from a year ago, state-run banks could raise their Mudra loans by only ₹20,539.01 crore in the same period.
The PMMY Scheme was launched in April 2015. The scheme’s objective is to refinance collateral-free loans given by the lenders to small borrowers.
The scheme, which has a corpus of Rs 20,000 crore, can lend between Rs 50,000 and Rs 10 lakh to small entrepreneurs.
Banks and microfinance institutions (MFIs) can draw refinance under the MUDRA Scheme after becoming member-lending institutions of MUDRA.
Mudra Loans are available for non-agricultural activities up to Rs. 10 lakh and activities allied to agriculture such as Dairy, Poultry, Bee Keeping etc, are also covered.
Mudra’s unique features include a Mudra Card which permits access to Working Capital through ATMs and Card Machines.
There are three types of loans under PMMY:
- Shishu (up to Rs.50,000).
- Kishore (from Rs.50,001 to Rs.5 lakh).
- Tarun (from Rs.500,001 to Rs.10,00,000).
Fund the unfunded: Those who have a business plan to generate income from a non-farm activity like manufacturing, processing, trading or service sector but don’t have enough capital to invest can take loans up to Rs 10 lakh.
Microfinance institutions (MFI) monitoring and regulation: With the help of MUDRA bank, the network of microfinance institutions will be monitored. New registration will also be done.
Promote financial inclusion: With the aim to reach Last mile credit delivery to micro businesses taking help of technology solutions, it further adds to the vision of financial inclusion.
Reduce jobless economic growth: Providing micro enterprises with credit facility will help generate employment sources and an overall increase in GDP.
Integration of Informal economy into Formal sector: It will help India also grow its tax base as incomes from the informal sector are non-taxed.