Pradhan Mantri Mudra Yojana-funds to the unfunded

Pradhan Mantri Mudra Yojana to provide funds to the unfunded

Pradhan Mantri Mudra Yojana has been established with the aim of providing funds to startups and small businesses in all parts of the country. The Indian Government has already invested Rs 1 lakh crore in this project. Small businesses can borrow loans from this scheme, and it has been a great help to startups in India. As per the information collected from MUDRA’s official website, the number of sanctioned loans under the MUDRA Yojana is 26421492 up to 5th February 2016.

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Pradhan Mantri Mudra Yojana wants sustainable and inclusive development through welcoming and encouragement of partnership alliances and creation of an ecosystem that promotes growth for small business sectors.

What does MUDRA stand for?

An institution founded for micro finance organizations refinancing is Micro Units Development & Refinance Agency Ltd. it helps not only micro-institutions of finance like NBFCs, banks, etc. but also different financial intermediaries which lend money to processing, manufacturing, and trading. It helps those service industries, the credit demand of which does not exceed 10 lakh.

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Small banks are provided accessibility support by MUDRA, also MFIs and NBFCs for Pradhan Mantri Mudra Yajana. Apart from refinancing merchandise, development support will also be provided by MUDRA through several products to business sectors.

When MUDRA was launched, it was a subsidiary of SIDBI (Small Industries Development Bank of India), along with its 100% capital contribution. MUDRA’s authorized capital is now Rs 1,000 crore, and the paid-up capital is Rs 750 crore. Both these funds are supplied entirely by SIDBI.

Why did MUDRA Yajana come into existence?

In the economic sector of our country, the MSMEs or Micro, Small and Medium Enterprises are Indian economy’s backbone, involving approximately 10 crore people. The NSSO Survey that took place in the year 2013 explicitly stated that in India, the number of MSMEs is 5.77 crore. A large number of these enterprises are fathered by Scheduled Tribes, Scheduled Castes and different Backward Classes in the country.

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MSMEs are also famous by the name of Non-Corporate Small Business Sectors, that is, NCSBS. The gross amount of money that these small business sectors add to the economy of the country every year is Rs 6 lakh crore, and therefore, it can be considered as a significant segment of the country’s business. Most of the MSME organizations are proprietary or enterprises owned by single owners. The small sectors are engaged in processing, manufacturing, and commercial businesses. These companies, owned by sole owners, have remained underfinanced and unfinanced for years. Formal credit institutions usually do not offer financial help to such companies. Thus, unauthorized personal lenders like chit funds, relatives and friends are their only source of economic support. As per records, only 15% of the total amount that the banks invest in loans every year is received by the Micro, Small and Medium Enterprises. What is most unfortunate is that personal credit lines are not regulated, and therefore, in several cases, the debtor becomes the victim in the end. The debtor is thus, forced to file a complaint against the person to whom he has given money. In such cases, the MSMEs not only suffer from lack of growth opportunities but also lose its reputation and financial viability in the market.

The quick setup of Pradhan Mantri Mudra Yajana resolves to fix all the problems mentioned above that Non-Corporate Small Business Sectors have to face, particularly in the initial stages of their business. The goal of the Pradhan Mantri Mudra Yajana is to provide funds to those who remain unfunded. MUDRA looks forward to providing opportunities for generating income to those who are actually at the financial pyramid’s bottom. It wants to create and sustain a robust business ecosystem- one that is expected to provide sustenance to the lives of at least 50 crore inhabitants of the nation.

Roles performed by MUDRA

The functions that MUDRA performs can be listed as follows:

  • Introducing policies for small/microenterprise businesses
  • Providing standard guidelines to lend money to small/micro enterprises
  • MFI or Micro Finance Institutions’ Registration
  • MFI regulation
  • Evaluation or certification of MFI
  • Offering the best technological solutions
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Apart from initiating as well as executing several activities, now MUDRA is also likely to provide service in refinances and monitor all information regarding Pradhan Mantri Mudra Yajana.

What are the Documents and Eligibility Criteria needed for applying the MUDRA Loan?

  • For Identity Verification ID Card (Aadhaar Card, Voter ID, PAN Card, Driving Licence, Passport) and Self Certified Copy is necessary.
  • Residential Proof which must contains current electricity (or) Telephone bill and receipt of Property tax (which is not 02 months older).   Aadhaar Card, Voter ID, PAN Card, Driving Licence, Passport can also be used as a Address Proof.
  • OBC / SC / ST / Minority Proof.
  • In order to prove the ownership copies of related registration / Licence certificates and also other related documents are necessary.
  • The candidate should not be a offender in any Bank (or) Finance Companies.
  • From the existing bank (If any) needed “Statement of Balances” (from the last 06 Months).
  • Business Units balance sheets together with sales tax and Tax records (from the previous 02 years) which are applicable for all loans taking from 02 lacs and more.
  • The Projected balance sheet for a year
  • The project report (the project which is planning) should contains details of Technical & financial calculations.
  • Memorandum and Articles of association of the company
  • Statements of Assets and Liabilities from the borrowers of Directors and partners
  • 02 directors, partners, proprietor photographs
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