Mudra Shishu loan for small businesses and cottage industries
Part of: GS-Prelims and GS-III – Economy
- The Central government has announced ‘Mudra Shishu loan’ for small businesses and cottage industries so that shopkeepers do not suffer due to the COVID-19 pandemic.
- A 1500 crore interest subvention has been announced.
- 2% interest rate subvention for a period of 12 months shall be offered by the Government.
- It shall benefit small borrowers under the Mudra Shishu loans up to ₹50,000.
Important value additions
Micro Units Development and Refinance Agency (MUDRA)
- It is a Non-Banking Financial Company which supports development of micro enterprise sector in the country.
- It provides refinance support to Banks / MFIs for lending to micro units having loan requirement upto 10 lakh.
- It provides refinance to micro business under the Scheme of Pradhan Mantri MUDRA Yojana.
- MUDRA offers incentives through these interventions:
- 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.
- Generally, loans upto 10 lakh issued by banks under Micro Small Enterprises are given without collateral.