- Pradhan Mantri Mudra Yojana is a scheme launched by the government in 2015 for providing loans up to Rs. 10 lakh to the non-corporate, non-farm small/micro-enterprises.
- MUDRA (Micro Units Development & Refinance Agency ) Ltd., is a financial institution set up by the Government to provide funding to the non-corporate small business sector through various last-mile financial institutions like Banks, Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs).
- MUDRA is a refinancing Institution i.e, it does not lend directly to micro entrepreneurs / individuals.
Types of loans provided
- Shishu : covering loans upto 50,000/-
- Kishor : covering loans above 50,000/- and upto 5 lakh
- Tarun : covering loans above 5 lakh and upto 10 lakh
Why in News?
The government has approved a scheme for interest subvention of 2% for a period of 12 months, to all Shishu loan accounts under Pradhan Mantri Mudra Yojana to eligible borrowers.
- This Scheme is for implementation of one of the measures relating to MSMEs, announced under the Atma Nirbhar Bharat Abhiyan.
- Refer Pulse #2 edition for details on Atmanirbhar Bharat Abhiyan.
- The ongoing Covid-19 crisis and the consequent lockdown has led to severe disruption of business and had a severe impact on their cash flows, jeopardizing their ability to service their loans.
- The Scheme will be implemented through the Small Industries Development Bank of India and will be in operation for 12 months.
Positive Impact of the scheme
- The Scheme has been formulated as a specific response to an unprecedented situation due to Covid-19 and aims to alleviate financial stress for borrowers.
- The Scheme is expected to provide much-needed relief to the MSME sector, thereby enabling small businesses to continue functioning without laying off employees due to lack of funds.
- By supporting small businesses to continue functioning during these times of crisis, the Scheme is expected to have a positive impact on the economy and support its revival, which is necessary for employment generation in future.