10 Things you must know about Mudra Bank

Name

Mudra Bank stand for Micro Units Development Refinance Agency (MUDRA), also, Mudra, in hindi means Currency.

Setting up

Mudra Bank is being set up through a statutory enactment and will be responsible for developing and refinancing through a Pradhan Mantri MUDRA Youjana

Last mile financiers

Since small entrepreneurs are business are often cut off from banking system because of limited branch presence, mudra bank will partner with local coordinators and provide finance to “Last Miles Financiers” of small/micro business.

Target

The Finance Ministry said measures to be taken up by MUDRA are targeted towards mainstreaming young, educated or skilled workers and entrepreneurs including women entrepreneurs.

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 rigidly follow “responsible financing practices” so deter borrowers from indebtedness.

Corpus

The Bank will be set up with a corpus of Rs 20,000 crore and a credit guarantee fund of Rs 2,000 crore.

Shishu/Tarun/Kishor

The Bank will nurture small businesses through different stages of growth and development of businesses termed as Shishu, Kishor and Tarun.
Shishu: This is will be the first step when the business is just starting up. The loan cover in this stage will be upto Rs 50,000.
Tarun: This last and final category will provide loans for up to Rs 10lakh.
Kishor: In this stage, the entrepreneur ranging from Rs 50,000 to Rs 5 lakh.