Discussion on Pradhan Mantri Mudra Yojana – A boon for entrepreneurs

AIR Spotlight Discussion: Discussion on PM Mudra Yojana – A boon for entrepreneurs

General Studies 2: Schemes & Governance

TOPIC: Discussion on Pradhan Mantri Mudra Yojana – A boon for entrepreneurs

• Pradhan Mantri MUDRA Yojana (PMMY) scheme was launched by Prime Minister Narendra Modi on April 8, 2015. Under this yojana, the government provides financial assistance of Rs 10 lakh to non-corporate, non-farm small/micro enterprises to promote startups. Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs have been roped in to provide this loan facility to the right beneficiaries. 
• Government has said that over 30 crore loans amounting to 15 lakh 97 thousand crore rupees have been sanctioned under Pradhan Mantri Mudra Yojana since inception of the Scheme in April, 2015.

Significance and objective of mudra yojana:

• Under the Pradhan Mantri MUDRA Yojana (PMMY), MUDRA scheme offers credit to businesses with a loan requirement of up to ₹ 10,00,000/-. The scheme aims to promote entrepreneurship among the youth, generate employment and enhance income. 
• The yojana develop and improve entrepreneurial culture in the country by providing collateral free and cheap credit to “millions of unfunded micro units” which were otherwise struggling to establish due to lack of availability of funds. 
• The MUDRA Yojna filled the gap of unfunding or shortage of the funds. 
• It also boosts the morale of “first generation entrepreneurs” by providing financial assistance for setting up their businesses and expanding it further.

Advantages of mudra loan

• Collateral-free: You do not run the risk of losing personal or business property in case you are unable to repay the loan.
• Not expensive: The rates of interest are very reasonable – 8.40 – 12.45%. If you are a woman entrepreneur, you get the benefit of lower rates of interest.
• Overdraft: In addition to the loan, you can avail an overdraft facility of up to ₹ 5000/-.
• Debit card: You can apply for the MUDRA debit card that can be used at any ATM to access your loan funds.
• Flexibility in loan tenure: You can choose to extend the tenure of the loan to 7 years or you may repay it within a shorter period.
• Limited processing fees: The processing fees for loans is nominal. If you apply under the Shishu category, you do not have to pay any processing fees.

Rate of interest: rate of interest is bearable for people

The loan include under the MUDRA loan are ‘Shishu’, ‘Kishor’ and ‘Tarun’.

• Shishu: For initial stages of a business or for those interested in starting a new business – for loans up to ₹ 50,000/-
• Kishor: For those who need funds to expand their operations – for loans ranging from ₹ 50,000/- to ₹ 5,00,000/-
• Tarun: For those who have an established business and are looking for further growth or diversification – for loans ranging from ₹ 5,00,000/- to ₹ 10,00,000/-

CONNECTING THE DOTS:

• Discuss the significance and objectives of mudra yojana.