PRADHAN MANTRI MUDRA YOJANA (PMMY)

Budget Announcement:
In Union Budget 2015-16, Honbe FM proposed to create a Micro Units Development &
Refinance Agency (MUDRA) Bank for regulating and refinancing micro finance institutions
(MFIs). A sum of Rs. 20,000 crore has been allocated by RBI, from shortfalls of Priority Sector
Lending for creating a Refinance Fund to provide refinance to the Last Mile Financers. Another
Rs. 3,000 crore would be provided from the budget to create a Credit Guarantee corpus for
guaranteeing loans being provided to the micro enterprises. For the present, Rs. 500 crore has
been allocated for Credit Guarantee Fund under the supplementary Grants.
Background:
As per NSSO survey (2013), there are 5.77 cr small/ micro units in the country, which
employ around 12 crore people, mostly individual proprietorship / Own Account Enterprises.
Over 60% of units owned are by persons belonging to Scheduled Caste, Scheduled Tribe or
Other Backward Classes. Majority of these units are outside the formal banking system and
are forced to borrow from informal sources or use their limited own funds. Objective of MUDRA
is to bridge the gap in last mile financing in partnership with Public & Private Sector Banks /
Non-Banking Financial Companies (NBFCs) / Regional Rural Banks (RRBs) / MFIs etc. by
increasing the access to finance to the unbanked. By creating a robust architecture of Last
Mile Credit Delivery, MUDRA will aim to increase the confidence of the aspiring young persons
to become first generation entrepreneurs as also of existing small businesses to expand their
activities.
MUDRA Bank Objective:
MUDRA Bank would be responsible for regulating and refinancing MFIs which are in the
business of lending to micro/small business entities engaged in manufacturing, trading and
services activities. The Bank would partner with State level/ Regional level co-ordinators to
provide finance to Last Mile Lenders of small / micro business enterprises.
Main objectives of the MUDRA Bank are:i) Laying down policy guidelines for micro/small enterprises financing business
ii) Registration, Regulation and Accreditation/rating of MFI entities
iii) Development of standardised set of covenants governing last mile lending to micro/small
enterprises and promoting right technology solutions for the last mile.
iv) Formulating and facilitating a Credit Guarantee scheme for providing guarantees to the
loans which are being extended to micro enterprises.
v) Creating a good architecture of Last Mile Credit Delivery to Micro Businesses under the
scheme of Pradhan Mantri MUDRA Yojana. It would also provide refinance to
Banks/NBFCs/MFIs
vi) Lending under MUDRA will focus on the unfunded segments of the Micro Enterprises so
that they can significantly contribute to the nations GDP.

Since MUDRA Bank will require a statutory enactment for its formation, it was decided
to launch MUDRA as a NBFC and accordingly the same was launched on April 08, 2015 by the
Honble Prime Minister. Pradhan Mantri Mudra Yojana (PMMY) was also launched on the
same day, whereby all loans to finance micro entrepreneurs by banks/financial institutions for
income generating and non-farm activities upto Rs.10 lakh would be covered under the Yojana.
MUDRA will also facilitate Credit Guarantee Support under the PMMY.
Micro Units Development & Refinance Agency Ltd. (MUDRA) has been set up as a
subsidiary of SIDBI with share capital of Rs. 250 crore. Presently, MUDRA Ltd is incorporated
under sub section (2) of Section 7 of the companies Act, 2013 and rule 8 of the companies
(incorporation) Rules, 2014.

Category of Loans under PMMY:

There are three segments of loan under PMMY, which are as under:

Loans upto Rs. 50,000 (Shishu)

Loans from Rs.50, 001 to Rs. 5 lakh (Kishore )
Loans from Rs.5.0 lakh to Rs. 10 lakh (Tarun)

The main emphasis is on Shishu category which shall cover shopkeepers, fruits /
vegetable vendors, truck & taxi operators, food-service units, repair shops, machine operators,
small industries, artisans, food processors, street vendors and many others. It has been
envisaged that 60% of the credit flow should go to Shishu category.

Progress under PMMY & MUDRA

MUDRA has started functioning from its corporate office at MSME Development Centre,
SIDBI Towers, Bandra Kurla Complex, Bandra East, Mumbai- 400051. Dr. K Shivaji IAS,
CMD, SIDBI is the Chairman of the Board of MUDRA. Shri Jiji Mammen has been
appointed as the full time CEO. 97 Officers located in different SIDBI Regional
Office/Branch Office are identified as MUDRA Nodal Officers to act as first point of
contact.
Allocation of Rs.20,000 crore as refinance corpus fund has been made by RBI in May
2015. An amount of Rs 5000 crore is received by MUDRA as first tranche.
MUDRA website (www.mudra.org.in) was launched on 10 April 2015 and is also being
utilized for updating PMMY data.
Two Stakeholders discussions were held at national level on March 25 & April 22, 2015, to
discuss on products, process, pricing and partners to MUDRA. Regional Consultation
Meet was held at Patna on May 10, 2015 to elicit views of Banks/RRBs/MFIs on MUDRA
Ltd.
Eligibility criteria for the partner institutions, like scheduled commercials banks, RRBs and
NBFC-MFIs/NBFCs, Scheduled Cooperative Banks and State Cooperative Banks,
finalized by the Board, has been announced through the newspaper and also placed in the
website.
27 Public Sectors Banks, 17 Private Sector Banks, 29 Regional Rural Banks, 30 MFIs &
22 NBFCs (totalling to 125) have been enrolled/ found to be eligible to be enrolled as
partner institutions. General Refinance Agreement has already been executed with 24
Public/Private Sector banks and 8 RRBs. A Board approved lending policy for MFIs, PSBs,
Private Sector Banks, RRBs, Scheduled Cooperative Banks and NBFCs has been advised
to the partner institutions. MUDRA has rolled out General Refinance Schemes for different
partner institutions finalised by the Board. MUDRA has also prepared and announced 10
indicative schemes, covering various entrepreneurial activities eligible for MUDRA loans
including Women Enterprises schemes, with a lesser interest rate.
Public Sector Banks have been allocated a total target of Rs.70,000 crore, and private
sector/ Foreign Banks a target of Rs 30000 cr. The RRBs were given a target of Rs 22,188
crore. All together, the target under PMMY for Banks is fixed at 1,22,188 core. In addition,
another Rs 25000 crore is expected to be disbursed through MFIs and NBFCs.

Progress in PMMY with regards to banks so far is as under:

Disbursement data* for all Banks as on August 07, 2015
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Particulars
No of A/Cs
Shishu *
(Loans up to Rs. 50,000)
Kishore (Loans above Rs.
50,000 and upto Rs. 5.00 Lakh )
Tarun (Loans above Rs. 5.00
lakh and up to Rs. 10.00 Lakh)
Total
* Disbursement data is of PSBs/RRBs/ Private Banks.

Disbursement Amt
1500343

2496.23

430634

8036.83

76340
2007317

4963.04
15496.1

**Shishu includes 263443 number of PMJDY OD accounts for an amount of Rs.43.69 crore opened

A common application form has been designed for the PMMY loans and has been sent to
all the banks for its adoption.
MUDRA shall be providing Refinance / Credit guarantee support to the eligible institutions/
loans.
Meeting with partner agencies
Several stake holders have been held. First meeting was held with Sa-Dhan members on
June 19, 2015 at Delhi and discussed about MUDRA scheme and how they can take
benefit.
Similarly an interaction with members of MFIN was done on June 29, 2015 at Mumbai and
discussed about MUDRA scheme including expediting the refinance/finance, submission
of PMMY data etc
Similar kind of regional workshops are planned in different regions. Two such workshops
are planned in Ahmedabad on 21 August 2015 and in Kolkotta on 24 August 2015.
INTEREST RATES
Interest rates finalised, based on the instructions of RBIs, keeping the lower/ higher bench
marks indicated by RBI.
Present Rate of Interest (ROI) of refinance for all banks is fixed at 6.72 % p.a.
MFIs and NBFCs will be charged differential interest rates varying from 10 to 12.25% p.a,
based on their rating.
While, MFI will follow the interest rates of RBI Master circular, the NBFC will have a spread
of 6%.
Women enterprises scheme has 25 bps interest rebate.
REFINANCE ASSISTANCE EXTENDED
An amount of Rs 240 cr sanctioned to 9 MFIs/ NBFCs, out of which Rs 72.50cr disbursed
to 3 NBFC-MFIs.
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 An amount of Rs 25 cr disbursed to IDBI Bank Ltd under Refinance.

Cumulative disbursement stands at Rs.97.50 cr.
Applications for Rs.805 cr from 10 MFIs/ NBFCs under different stages of process with
SIDBI offices.

MUDRA Card
An innovative hassle free credit product to small borrowers who are availing MUDRA
loans. The loan can be withdrawn on demand and has flexibility in operation.
A co-branded card with MUDRA and the issuing bank, issued directly or in association with
MFI.
Mudra Card is a Debit card on RuPay platform and can operable on ATMs and POS
machines.
Six banks, viz. Allahabad Bank, Corporation Bank, PNB, CBI, Vijaya Bank and Uttar Bihar
Gramin Bank already launched the product.
IDBI Bank ltd, although not had any formal launching, started issuing the cards through
Saija Finance Pvt Ltd, an MFI.
Other banks like Oriental Commercial Bank, Bank of Maharashtra, SBI, Canara Bank and
Yes Bank have shown interest in issuing MUDRA card.
MUDRA to provide refinance / credit guarantee against loans granted under MUDRA Card.
A common Layout / design for MUDRA card as approved by NPCI and circulated to all
Banks for the uniform replication
NPCI has also issued separate IIN for MUDRA cards to those banks who have
approached them.
About 20185 cards issued so far for an amount of Rs.22.16 crore.
RBI has also given its approval for MUDRA card subject to the condition that, thee shall be
non participation of risk by NBFCs/ MUDRA.

*****

FAQs
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1. What is MUDRA?
MUDRA, which stands for Micro Units Development & Refinance Agency Ltd., is a new
institution set up by Government of India for development and refinancing activities relating to
micro units. The purpose of MUDRA is to provide funding to the non corporate small business
sector.
2. Why MUDRA has been set up?
The biggest bottleneck to the growth of entrepreneurship in the Non Corporate Small
Business Sector (NCSBS) is lack of financial support to this sector. Majority of this sector
does not have access to formal sources of finance. GoI is setting up MUDRA Bank through a
statutory enactment for catering to the needs of the NCSBS segment or the informal sector
for bringing them in the mainstream. To begin with it is being set up as a subsidiary of SIDBI.
3. What will be roles and responsibilities of MUDRA?
MUDRA would be responsible for refinancing all Last Mile Financiers such as Non Banking
Finance Companies of various types engaged in financing of small businesses, Societies,
Trusts, Section 8 Companies [formerly Section 25], Co-operative Societies, Small Banks,
Scheduled Commercial Banks and Regional Rural Banks which are in the business of
lending to micro/small business entities engaged in manufacturing, trading and services
activities. The Bank would partner with State/regional level financial intermediaries to provide
finance to Last Mile Financier of small/micro business enterprises.
4. What are the offerings of MUDRA? How will MUDRA function?
Under the aegis of Pradhan Mantri MUDRA Yojana (PMMY), MUDRA has already created its
initial products / schemes. The interventions have been named 'Shishu', 'Kishore' and 'Tarun'
to signify the stage of growth / development and funding needs of the beneficiary micro unit /
entrepreneur and also provide a reference point for the next phase of graduation / growth to
look forward to :
a. Shishu: covering loans upto 50,000/b. Kishore: covering loans above 50,000/- and upto 5 lakh
c. Tarun : covering loans above 5 lakh to 10 lakh
MUDRA will be operating as a refinancing institution through state/regional level
intermediaries. MUDRA's delivery channel is conceived to be through the route of refinance
primarily to NBFCs / MFIs, besides other intermediaries including banks, Primary Lending
Institutions, etc.
At the same time, there is a need to develop and expand the delivery channel at the ground
level. In this context, there is already in existence, a large number of 'Last Mile Financiers' in
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the form of companies, trusts, societies, associations and other networks which are providing
informal finance to small businesses.
5. Who are the target clients of MUDRA? What kinds of borrowers are eligible for
assistance from MUDRA?
Non Corporate Small Business Segment (NCSBS) comprising of millions of proprietorship /
partnership firms running as small manufacturing units, service sector units, shopkeepers,
fruits / vegetable vendors, truck operators, food-service units, repair shops, machine
operators, small industries, artisans, food processors and others, in rural and urban areas.
6. Are Regional Rural Banks (RRBs) eligible for assistance from MUDRA?
Yes, MUDRA will be extending refinance support to RRBs for enhancing their liquidity.
7. What is the rate of interest charged by MUDRA?
MUDRA will be a refinancing agency which will extend its funds to Last Mile Financiers to
enable them to reach out to the sector. Access to finance in conjunction with rational price is
going to be the unique customer value proposition of MUDRA. It will use a variety of
innovative financing means to bring down the cost of funding for the ultimate borrower.
Present Rate of Interest (ROI) of refinance for all banks is fixed at 6.72 % p.a. MFIs and
NBFCs will be charged differential interest rates varying from 10 to 12.25% p.a, based on
their rating.8. I have a small business dealing in paper goods. Can PMMY help me?
Yes. PMMY will offer smaller loans upto Rs.50,000/ under the 'Shishu' category and beyond
Rs.50,000 and upto Rs.5 lakh under the 'Kishore' category. These products have been
designed to cater to customers operating at the lower end of the enterprise spectrum. The
loans will be extended through MFIs, NBFCs, Banks etc.
9. I have graduated recently. I want to start my own business. Can PMMY help me?
PMMY offers smaller loans upto Rs.50,000/ under the 'Shishu' category and beyond
Rs.50,000 and upto Rs.5 lakh under the 'Kishore' category. It also offers loans beyond Rs.5
lakh and upto 10 lakh under the Tarun category. Depending on your nature of business
project requirement you can access finance from one of the intermediaries of MUDRA as per
the norms.
10. I have diploma in food processing technology. I want to start my own unit. Please
guide me.
Food Processing is an eligible activity for coverage under one of the PMMY schemes. You
can avail assistance under PMMY schemes as per your requirements.

11. I am an artisan specialising in Jari work. I want to start my own work instead of
doing job work for others. Can PMMY help me?
You can avail assistance under the Shishu category of Micro Credit Scheme of PMMY
through any of the MFIs operating in your region for setting up your own enterprise.
12. I have done a course on fashion designing. I want to open my own boutique and
develop my own brand. What help can PMMY offer to me?
MUDRA operates a special refinance scheme for women entrepreneurs; viz; Mahila Uddyami
Scheme. Assistance will be provided under all three groups, viz. 'Shishu', 'Kishore' as well as
'Tarun'.
13. I intend to work on franchisee model and open an ice cream parlour. Can PMMY
help me?
MUDRA operates a special scheme 'Business loans for Traders and Shopkeepers'. You can
avail the facilities under the scheme as per your requirements.
14. I want to expand my pottery business by adding more variety and designs. What
help can I get from PMMY?
You can avail assistance under the 'Shishu' category of Micro Credit Scheme of PMMY
through any of the MFIs operating in your region for setting up your own enterprise.
15. Scope of PMMY & various types of loan available and which are the agencies that
will provide loan?
Pradhan Mantri Mudra Yojana (PMMY) will be extended by all Public Sector Banks such as
PSU Banks, Regional Rural Banks and Cooperative Banks, Private Sector Banks, Foreign
Banks, Micro Finance Institutions and Non Banking Finance Companies. All loans upto a
loan size of Rs.10 lakh provided for non farm sector income generating activities since April
08, 2015 is treated as PMMY.
16. Who will monitor the implementation of PMMY?
Monitoring of PMMY will be done at the State level through SLBC forum and at national level
by MUDRA/Department of Financial Services, Govt. of India. For this purpose, MUDRA has
developed a portal, wherein the banks and other lending institutions directly feed their
achievement details which is consolidated by the system and reports are generated fro review
17. Is there any scheme in Central/State Govt., which is applicable all over India, in
which loan without guarantee is granted/the guarantors identity is checked?
Pradhan Mantri MUDRA Yojana (PMMY) is a Govt. of India Scheme, which enables a small
borrower to borrow from banks, MFIs, NBFCs for loans upto Rs.10 lakh for non-farm income
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generating activities. Generally, loans upto Rs.10 lakh issued by banks under Micro Small
Enterprises is given without collaterals.
18. Are opening of a school, carpentary and RO water plant installation eligible for the
loan, If So, what is the maximum and minimum amount of loan?
Carpentary, RO water plant installation, on a business mode, and educational institution are
eligible activities under PMMY loan, if the laon amount is below Rs 10 lakh. The primary
requirement for being a PMMY laon is to be a income generating activity udnr manufacturing,
processing, trading and service sector and the loan amount is below Rs 10 lakh.
19.What is the eligibility of persons for availing MUDRA loans?
Any Indian Citizen who has a business plan for a non-farm sector income generating activity
such as manufacturing, processing, trading or service sector and whose credit need is less
than Rs.10 lakh can approach either a bank, MFI, or NBFC for aviling of MUDRA loans under
Pradhan Mantri Mudra Yojana (PMMY). The usual terms and conditions of the lending agency
may have to be followed for availing of loans under PMMY. The lending rates are as per the
RBI guidelines issued in this regard from time to time.
20. Is there any subsidy under Pradhan Mantri Mudra Yojana (PMMY). If so details
thereof ?
There is no subsidy for the loan given under PMMY. However, if the loan proposal is linked
some Government scheme, wherein the Government is providing capital subsidy, it will be
eligible under PMMY also
21. Kindly provide brief Profile of MUDRA.
MUDRA which stands for Micro Units Development and Refinance Agency Ltd. is a refinance
agency and not a direct lending institution. MUDRA provides refinance support to its
intermediaries viz. Banks/ Micro Finance Institutions/Non Banking Finance Companies, who
are in the business of lending for income generating activities in the non farm sector in
manufacturing, trading and services sector and who in turn will finance the beneficiaries.
22.Can you provide information on MUDRA Card?
MUDRA Card is an innovative credit product wherein the borrower can avail of credit in a
hassle free and flexible manner It will provide a facility of working capital arrangement in the
form of CC/OD to the borrower. Since MUDRA Card will be a RuPay Debit Card, it can be
used for drawing cash from ATM or Business Correspondent or make purchase using Point of
Sale machine. Facility is also there to repay the amount as and when surplus is available,
thereby reducing the interest burden.
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