The Union Finance and Corporate Affairs Minister recently said women entrepreneurs are accorded first priority under the Centre's flagship Pradhan Mantri Mudra Yojana scheme.
About Pradhan Mantri Mudra Yojana (PMMY)
- It is a flagship scheme of the Government of India to extend affordable credit to micro and small enterprises.
- Mudra schemes are designed to bring enterprises into the formal financial system or to “fund the unfunded”.
- It enables a small borrower to borrow from all Public Sector Banks such as PSU Banks, Regional Rural Banks and Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions (MFI), and Non Banking Finance Companies (NBFC) for loans upto Rs 10 lakhs for non-farm income-generating activities.
- Eligibility: Any Indian citizen who has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading, or the service sector and whose credit need is less than Rs 10 lakh can approach either a bank, MFI, or NBFC for availing of Micro Units Development & Refinance Agency Ltd. (MUDRA) loans under PMMY.
- Types of loans provided: Under the aegis of PMMY, MUDRA has already created the following products
- Shishu: covering loans upto 50,000/-
- Kisho: covering loans above 50,000/- and upto 5 lakh
- Tarun: covering loans above 5 lakh and upto 10 lakh
- There is no subsidy for the loan given under PMMY. However, if the loan proposal is linked to some Government scheme, wherein the Government is providing capital subsidies, it will be eligible under PMMY also.
Q1) What are Microfinance Institutions (MFI)?
Microfinance institutions (MFIs) are financial companies that provide small loans to people who do not have any access to banking facilities. The definition of "small loans" varies between countries. In India, all loans that are below Rs. 1 lakh can be considered as microloans.