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Mudra Loans and Start-ups – A Detailed View
Along with so many new innovative schemes being developed in India, Mudra Bank scheme was also introduced to the people of India with a basic idea of promoting entrepreneurship and decreasing the problem of unemployment. Under this scheme financial assistance or loans are given to people or institutions for generating activities that would give them income. For any kind of servicing or manufacturing company loans would be provided under the MUDRA or start-up scheme.
|Name of the scheme||MUDRA Loan Yojana|
|Full form of MUDRA||Micro Units Development and Refinance Agency Ltd.|
|Scheme launched by||Narendra Modi|
|Launch date||8th April 2015|
|Scheme targeted towards||Any person who wants to start a small scale manufacturing or service business|
|Objective of the scheme||Development and growth of aspiring small entrepreneurs|
|Coverage of the scheme||All over India|
|Amount Disbursed So far under this Yojana||Rs.24,000 Crore|
|Number of Small Scale Entrepreneurs Benefited under this Yojana so far||About 3.7 million|
Loans that will be provided under this scheme would be for the opening of a business and then making money out of it and then generating more employment
Objective of the scheme
Unemployment is a big problem that is present in India due to which the country is facing problems in moving towards development. For generating employment it is necessary that more businesses come to existence. But then for business to start and raise money or investment money is required, which will be provided by the MUDRA scheme.
So the main objective of the scheme is to provide loans to borrowers who want to start new business relating to services or manufacturing. Now it is true that there are many commercial banks that provide loans for starting business, but then with these loans the payback amount along with interest is huge and due to which people do not take loans. This scheme is designed in such a way that borrowers can pay back money with lesser interest and also take more time in paying back the loan money.
So by promoting people to take loans from MUDRA scheme and start small businesses, the government would be generating more employment and business opportunities.
- Under this scheme loans can be given to entrepreneurs who want to start business. The loan amount should be minimum of Rs.50000 and a maximum of Rs.10 lakhs. Once financial institutions and banks become a member of MUDRA scheme they can lend money to business and aspiring entrepreneurs.
- Business are categorized into three types under this scheme and accordingly loans are given. Shishu business are eligible for loan up to Rs.50000, Kishor business for a loan of ranging from Rs.50,000 to Rs.5 lakhs and Tarun business can get loan raging from Rs.5 lakhs to 10 lakhs.
- Under the scheme the loan amount given would include working capital and term loan requirement. MUDRA loans can be taken from a private or a public sector financial institution that are registered under MUDRA scheme. It has to be noted that the scheme does not provide any subsidy or waiver.
- Any individual or group having a business idea or proposal can approach the banks and if all criteria is met, loan will be provided. The rate of interest at which the loan is provided under this scheme is much lesser when compared to other loan schemes.
Effectiveness of the scheme so far
Since the launch of the scheme it has been seen that that the scheme has shown quite some impressing results and it seems to be reaching a lot of people in different and remote parts of the country. The actually figures of the impact of the scheme will be understood once the budget of financial 2017.18 is announced. But otherwise here are some notable marks that that the scheme has achieved till now-
- The scheme is increasing confidences among the people of the country to take MUDRA loans from the financial institutions and then open up their business. There are many skilled and educated individuals in the country who are unemployed but are now taking MUDRA loans and becoming self-employed.
- Reports show that until 1st January 2016 Rs.71312 crore has been given as loan to around 1.73 crore borrowers in the country
- As of now the MUDRA loan scheme has been availed by around 1.7 crore borrowers with an average household size of 4.8 individuals. Also the scheme has been reported to have touched around 6.5% of the population of the country
- Certain banks such as Indian Overseas Bank, State Bank of Travancore and Bank of Maharashtra have drawn around Rs.2000 crore so far from the approved Rs.5000 crore refinance. Which means they have to high on lending more and more entrepreneurs.
- Applying for loans in India was quite difficult, as it required a lot of paper work, and took a lot of time. But MUDRA scheme, with the support of Jan Dhan Yojana has made the procedure of taking loan much simpler and so there is an increase in the number of individuals or groups who have taken loans for starting businesses.
Even though the scheme has been showing some impressive results but then there is still a long way to go, a there are still many rural areas where the scheme has still not reached. So one has to see that how fast and effectively the scheme can make a difference in the whole country.