To enable every last mile financer to lend credit to all types of businesses in the country, the MUDRA- Micro Units Development and Refinance Agency bank was established as a public sector financial institution. Low rate loans are provided by micro financers under this scheme.
This Government scheme is an important topic for the IAS Exam. Subjects related to this topic are Indian Polity and Social Justice from General Studies paper 2 as well as Indian Economy from general Studies paper 3 of the UPSC Syllabus.
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Pradhan Mantri Mudra Yojana
Launched in April 2015 by the Prime Minister, the Mudra Yojana aims to enable Micro Finance Institutions (MFIs), Non-Banking financial institutions/Companies (NBFCs), Small Finance Banks, RBRs, Commercial Banks, Cooperative Banks, etc. to provide Low Rate Loans to eligible entities.
Candidates can know the detailed information about the Pradhan Mantri Mudra Yojana on the Official Website.
PMMY Eligibility
To avail of the benefits of the PMMY Scheme, the person should be a citizen of India. The loans are basically for people having a business plan in a Non-Farming Sector with Income generating activities like the following:
- Manufacturing
- Processing
- Trade
- Service Sector
- Or any other fields whose credit demand is less than ₹10 lakhs.
The Indian Citizen seeking MUDRA Loans under the PMMY Scheme will have to approach either an MFI, Bank or NBFC to avail it.
Objectives of Pradhan Mantri Mudra Yojana –
- Funding the unfunded – To sanction loans up to rupees 10 Lakhs to 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
- Reducing jobless economic growth – To help generate sources of employment and increase the overall GDP by providing micro-enterprises with credit facilities.
- Monitoring and regulating the Microfinance institutions (MFI) – With the help of MUDRA bank, the network of microfinance institutions will be monitored and new registration will also be done.
- 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.
- Promoting financial inclusion – PMMY further adds to the vision of financial inclusion with the aim to reach the last mile credit delivery to micro-businesses and taking the help of technology solutions.
Types of PMMY Loans
The Pradhan Mantri Mudra Yojana (PMMY) has three products as per the funding requirements of the Beneficiary or the Entrepreneur.
| Name of the Type of Loan | Coverage of the Loan |
| Shishu | < ₹50,000 |
| Kishor | Above ₹50,000 up to ₹5,00,000 |
| Tarun | Above ₹5,00,000 up to ₹10,00,000 |
Sectors Covered under PMMY
To maximize coverage of beneficiaries and tailor products to meet requirements of specific business activities, sector/activity focused schemes would be rolled out. To begin with, based on the higher concentration of businesses in certain activities/sectors, schemes are proposed for:
| Sector | Comments | Types of Activities under that Sector |
|
Land Transport Sector |
Loans to support the purchase of transport vehicles. These vehicles could be used for goods or personal transport. |
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| Service Sector | This includes community services, social services, or personal services. |
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| Food Product Sector | Support for small scale food industries. |
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| Textile Sector | Supporting micro textile industries that produce garment and non-garment products. |
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Pradhan Mantri Mudra Yojana (PMMY):- Download PDF Here
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