New Delhi: The Rs 20,000-crore MUDRA Yojana, launched by Prime Minister Narendra Modi Wednesday to fund the "unfunded" with micro-lending of up to Rs 10 lakh, may be converted into a bank in next 12 months with passage of a bill in this regard in Parliament.
The MUDRA Bill will seek to create a financial institution for providing collateral-free funding to 5.77 crore micro and small business entities engaged in manufacturing, trading and services.
The roles envisaged for the proposed MUDRA (Micro Units Development and Refinance Agency) Bank include laying down policy guidelines for micro enterprise financing business as well as registration of MFIs, their accreditation and rating.
Speaking at the launch of Pradhan Mantri MUDRA Yojana, Financial Services Secretary Hasmukh Adhia said there will not be a separate bill on MFIs as many components of that would be incorporated in the proposed MUDRA Bill.
Asked if there is a plan to merge old MFI Bill into MUDRA Bill, he said, "Some components of MFI Bill will definitely come to MUDRA Bill".
So, there will not be a separate MFI Bill, Adhia said, adding that "it will be a part of MUDRA Bill... It will be tabled in Parliament in the next 6 months to one year".
On a question if MUDRA would regulate the NBFC (MFI), Adhia said, "That decision would be taken when the Bill will be framed."
On whether MUDRA, a subsidiary of SIDBI registered as NBFC, would be transformed into a universal bank, he said the government is yet to firm up idea on this.
"Government can decide to make it as policy bank like NHB or it can decide to make it universal bank," he said.
Speaking about the broad contours of the proposed bill, he said, "It will define what is going to be the MFI. What is our definition of MFI. It will try and put in some process of registering new MFIs with MUDRA Bank."
It will also define functioning and objective of MUDRA Bank, Adhia said, adding that "it will also put in place entire mechanism as to how much interest rate can be charged for micro sector etc".
Soon after the launch, Modi said MUDRA scheme is aimed at "funding the unfunded". "The established financial systems will soon move to the MUDRA-model of functioning, i.e. To support entrepreneurs that give employment to a large number of people using least amount of funds."
He expressed confidence that within a year, banks would queue up to give loans to MUDRA applicants.
In his Budget speech, Finance Minister Arun Jaitley had proposed MUDRA with a corpus of Rs 20,000 crore, and credit guarantee corpus of Rs 3,000 crore.
Adhia said MUDRA has been registered as company and an NBFC under RBI. It will become a statutory body after the bill on this is passed by Parliament.
For now, he said, the government has "already appointed the CEO of this institution. One of the Chief General Managers of Nabard, Jiji Memon, has been appointed CEO of the institution. Even the board is in the place and CEO is in place so the functioning would start from today".
The institution has started the refinancing activity at 7 percent interest rate, he said.
The small entrepreneurs of India are used to exploitation at the hands of money lenders so far, but MUDRA will instil a new confidence in them that the nation is ready to support them in their efforts of nation building, he said.
The initial products and schemes under this umbrella have already been created and the interventions have been named 'Shishu', 'Kishor' and 'Tarun' to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur.
Shishu would cover loans up to Rs 50,000 while Kishor above Rs 50,000 and up to Rs 5 lakh. Tarun category will cover loans of above Rs 5 lakh and upto Rs 10 lakh.
