Transforming lives of the poor hard working Indian class through PMMY

Date : 18.June.2018

MUDRA, which stands for Micro Units Development and Refinance Agency is a financial institution set up by Government of India for development and refinancing micro unit enterprises. The purpose of MUDRA is to provide funding to the non-corporate small business sector through various Last Mile Financial Institutions like Banks, NBFCs and MFIs. It was formally launched by Honorable Prime Minister Narendra Modi on 8th April 2015. MUDRA is a refinance agency and not a direct lending institution. Prest Loans (www.prestloans.com) is one such NBFCs which is a pioneer in providing, Business Loans, MSME Loans (Long & Short term) for micro and small enterprises.

Micro- Enterprises

Micro Enterprises are the largest source of employment after agriculture sector and constitutes of about a major economic segment in our country. This segment includes micro units engaged in manufacturing, processing, trading and services sector. These are usually proprietorships or owned single handedly (formally known as Own Account Enterprises). These are also referred as Non-Corporate Small Business sector.

Majority of the Own account enterprises pertain to Rural sector and out of that too majority of them pertain to the manufacturing sector.

The Non-Corporate Small Business Sector

Non-Corporate Small Business Sector is perhaps one of the largest disaggregated business ecosystems in the world sustaining around 50 crore lives.

This sector comprises of myriad of small manufacturing units, shopkeepers, fruits / vegetable vendors, truck & taxi operators, food-service units, repair shops, machine operators, small industries, artisans, food processors, street vendors and many others.

It is surprising that such financial needs of this sector are not being met actively and they are largely self-financed or rely on personal networks or moneylenders.

Pradhan Mantri MUDRA Yojana (PMMY) was launched to harness this untapped potential market. Meeting the financial needs of this sector would not only ensure higher productivity and higher employment rates but also give boost to the Indian economy.

 

As we can see from the following figures, majority of the loans under PMMY were disbursed to SC/ST/OBC categories and women. 

Types of Loans under PMMY

Under the PMMY, loans can be availed uptil 10 lakhs (following are the details). It was launched to ensure that cheaper loans with minimum documentation can be disbursed quickly to those in need.

  • Shishu: covering loans upto Rs. 50,000/-
  • Kishor: covering loans above Rs. 50,000/- and upto Rs. 5 lakh
  • Tarun: covering loans above Rs. 5 lakh and upto Rs. 10 lakh

Prest Loans - wwww.prestloans.com - seeks to empower this sector by providing loans on above mentioned lines.

Critics' Notion

As per the data available on Mudra Yojana's official website almost 13 crore people were given loans under the scheme till May 25, 2018.

The total sanctioned amount of loan under Mudra Yojana was Rs 6 lakh crore out of which Rs 5.81 lakh crore had been disbursed to the beneficiaries.

However, the critics often point out that the amount of loan disbursed through this scheme cannot be considered large enough to launch a start up that could provide jobs to others. But this statement is misleading.

As per MUDRA Annual Report 2016-17; the average loan size under PMMY during FY 2016-17 increased to Rs. 45,471 as against Rs. 39,405 in the previous year. Similarly, the average loan size under Shishu category at Rs. 23,317 has been higher than that of Rs. 19,411 in the previous year. There is little change in the average loan size under Kishor and Tarun in FY 2016-17 with respect to FY 2015-16. But note that the average loan size under Kishor is Rs. 2 lakh and under Tarun is 7.75 lakhs.  

The government has won laurels in identifying the need of hour by launching various schemes to enable Micro Enterprises, SMEs and there is no doubt about the fact that PMMY will continue to provide the necessary boost to these enterprises and our economy. Prest Loans (www.prestloans.com) is one such NBFC through which hassle free small business loans and MSME loans can be availed with minimum documentation.

Sources:

https://bit.ly/2st8qEi

https://bit.ly/2sqYoUn