Power of Microfinance: PM on Criticism of MUDRA Scheme
Context:
Prime Minister Narendra Modi said on Thursday that those who facilitated loans for big corporate houses by calling up banks were making fun of MUDRA, the microfinance scheme of the government.
Points to Ponder:
- Prime Minister Narendra Modi delivered a speech at the National Rozgar Mela, emphasizing the importance of microfinance and the MUDRA scheme’s performance.
- He chastised those who enabled loans for large corporations by calling banks, claiming that they undervalued the potential of microfinance.
- Mr. Modi emphasized that more than 70% of MUDRA recipients were women and that the scheme had spawned 8 crore, new entrepreneurs.
- Former Finance Minister P. Chidambaram questioned the MUDRA scheme’s efficiency in a tweet, pointing out that 83% of loans under the scheme were less than RS 50,000.
- Mr. Modi reacted by claiming that the scheme had issued a total of 23 lakh crore in bank guarantee-free loans and had energized the economy at the grassroots level.
- Mudra stands for “Micro Units Development and Refinance Agency” and is a government project created in 2015 to provide financial help to small entrepreneurs in India.
- Non-corporate, non-farm small/micro-enterprises can apply for loans of up to ten lakh rupees under the scheme.
- Shishu (up to 50,000), Kishore (50,001 to 5 lakh), and Tarun (5,00,001 to 10 lakh) loans are available under the scheme.
- The loans are made available through the scheme’s registered banks, NBFCs (Non-Banking Financial Companies), and MFIs (Microfinance Institutions).
- Borrowers are not required to offer any security or guarantee for the loans because they are collateral-free.
- The Mudra scheme intends to encourage entrepreneurship, create job opportunities, and promote economic growth at the grassroots level.
- According to the Prime Minister, the Mudra scheme has spawned more than 8 crore new enterprises.
