Q. Pradhan Mantri MUDRA Yojana is aimed at

  • bringing the small entrepreneurs into formal financial system
  • providing loans to poor farmers for cultivating particular crops
  • providing pensions to old and destitute persons
  • funding the voluntary organizations involved in the promotion of skill development and employment generation

Answer: (a) bringing the small entrepreneurs into formal financial system

Pradhan Mantri MUDRA Yojana:
  • PMMY was launched by the Government of India in 2015.
  • The PMMY provides collateral-free institutional loans up to Rs. 10 lakhs for small business enterprises.
  • Mudra schemes are designed to bring enterprises into the formal financial system or to “fund the unfunded”.
  • Funding Provision:
    • It is provided by Member Lending Institutions (MLIs) i.e. Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs).
  • Types:
    • The loan can be used for income-generating activities in the manufacturing, trading, services sector, and agriculture.
    • There are three loan products under PMMY:
      • Shishu (loans up to Rs. 50,000)
      • Kishore (loans between Rs. 50,000 and Rs. 5 lakh)
      • Tarun (loans between Rs. 5 lakh and Rs. 10 lakh).
  • 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.
  • 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.
  • Steps Taken for the Improvement of the Scheme:
    • Provision for online applications through udyamimitra portal.
    • Some Public Sector Banks (PSBs) have put end-to-end digital lending for automated sanctions under PMMY.
    • Intensive publicity campaigns by PSBs and Mudra Ltd. for increased visibility of the scheme amongst the stakeholders.
    • Nomination of Mudra Nodal Officers in PSBs.