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MudraMicroUnitsDevelopment&RefinanceAgencyLtd.

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MudraOfferings
(/Default/DownloadFile/eligibilitycriteria.pdf)DownloadEligibilityCriteriaforavailingMUDRArefinance/loan.

Product/OfferingsofMUDRA
MicroUnitsDevelopmentandRefinanceAgencyLtd.[MUDRA]isanNBFCsupportingdevelopmentofmicroenterprisesectorinthecountry.MUDRAprovidesrefinance
supporttoBanks/MFIsforlendingtomicrounitshavingloanrequirementupto10lakh.MUDRAprovidesrefinancetomicrobusinessundertheSchemeofPradhan
MantriMUDRAYojana.Theotherproductsarefordevelopmentsupporttothesector.ThebouquetofofferingsofMUDRAisdepictedbelow.Theofferingsarebeing
targetedacrossthespectrumofbeneficiarysegments.

MudraOfferings

PradhanMantriMUDRAYojana(PMMY)
UndertheaegisofPradhanMantriMudraYojana(PMMY),MUDRAhascreatedproducts/schemes.Theinterventionshavebeennamed'Shishu','Kishor'and'Tarun'tosignify
thestageofgrowth/developmentandfundingneedsofthebeneficiarymicrounit/entrepreneurandalsoprovideareferencepointforthenextphaseofgraduation/growth
tolookforwardto:
Shishu:coveringloansupto50,000/
Kishor:coveringloansabove50,000/andupto5lakh
Tarun:coveringloansabove5lakhandupto10lakh
ItwouldbeensuredthatmorefocusisgiventoShishuCategoryUnitsandthenKishorandTarunCategories.
WithintheframeworkandoverallobjectiveofdevelopmentandgrowthofmicroenterprisessectorunderShishu,KishorandTarun,theproductsbeingofferedbyMUDRAare
sodesigned,tomeetrequirementsofdifferentsectors/businessactivitiesaswellasbusiness/entrepreneursegments.
ThefundingsupportfromMUDRAareoffourtypes:
MicroCreditScheme(MCS)forloansupto1lakhfinancethroughMFIs.
RefinanceSchemeforCommercialBanks/RegionalRuralBanks(RRBs)/ScheduledCooperativeBanks
WomenEnterpriseprogramme

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Securitizationofloanportfolio
MicroCreditScheme:
MicroCreditSchemeisofferedmainlythroughMicroFinanceInstitutions(MFIs),whichdeliverthecredituptoRs.1lakh,forvariousmicroenterpriseactivities.Although,the
modeofdeliverymaybethroughgroupslikeSHGs/JLGs,theloansaregiventotheindividualsforspecificincomegeneratingmicroenterpriseactivity.TheMFIsforavailing
financialsupportneedtoenrollwithMUDRAbycomplyingtosomeoftherequirementsasnotifiedbyMUDRA,fromtimetotime.
RefinanceSchemeforBanks:
DifferentbankslikeCommercialBanks,RegionalRuralBanksandScheduledCooperativeBanksareeligibletoavailofrefinancesupportfromMUDRAforfinancingmicro
enterpriseactivities.Therefinanceisavailablefortermloanandworkingcapitalloans,uptoanamountof10lakhperunit.Theeligiblebanks,whohaveenrolledwithMUDRA
bycomplyingtotherequirementsasnotified,canavailofrefinancefromMUDRAfortheloanissuedunderShishu,KishorandTaruncategories.
WomenEnterpriseProgramme:
Inordertoencouragewomenentrepreneursthefinancingbanks/MFIsmayconsiderextendingadditionalfacilities,includinginterestreductionontheirloan.Atpresent,
MUDRAextendsareductionof25bpsinitsinterestratestoMFIs/NBFCs,whoareprovidingloanstowomenentrepreneurs.
Securitizationofloanportfolio:
MUDRAalsosupportsBanks/NBFCs/MFIsforraisingfundsforfinancingmicroenterprisesbyparticipatinginsecuritizationoftheirloanassetsagainstmicroenterprise
portfolio,byprovidingsecondlossdefaultguarantee,forcreditenhancementandalsoparticipatingininvestmentofPassThroughCertificate(PTCs)eitherasSeniororJunior
investor.
PurposeofMUDRAloan
Mudraloanisextendedforavarietyofpurposeswhichprovideincomegenerationandemploymentcreation.Theloansareextendedmainlyfor:
1.(i)BusinessloanforVendors,Traders,ShopkeepersandotherServiceSectoractivities.
2.(ii)WorkingcapitalloanthroughMUDRACards.
3.(iii)EquipmentFinanceforMicroUnits.
4.(iv)TransportVehicleloans.
FollowingisanillustrativelistoftheactivitiesthatcanbecoveredunderMUDRAloans:
1TransportVehicle
Purchaseoftransportvehiclesforgoodsandpersonaltransportsuchasautorickshaw,smallgoodstransportvehicle,3wheelers,erickshaw,passengercars,taxis,etc.
2Community,Social&PersonalServiceActivities
Saloons,beautyparlours,gymnasium,boutiques,tailoringshops,drycleaning,cycleandmotorcyclerepairshop,DTPandPhotocopyingFacilities,MedicineShops,Courier
Agents,etc.
3FoodProductsSector
Activitiessuchaspapadmaking,achaarmaking,jam/jellymaking,agriculturalproducepreservationatrurallevel,sweetshops,smallservicefoodstallsanddaytodaycatering
/canteenservices,coldchainvehicles,coldstorages,icemakingunits,icecreammakingunits,biscuit,breadandbunmaking,etc.
4TextileProductsSector/Activity
Handloom,powerloom,khadiactivity,chikanwork,zariandzardoziwork,traditionalembroideryandhandwork,traditionaldyeingandprinting,appareldesign,knitting,
cottonginning,computerizedembroidery,stitchingandothertextilenongarmentproductssuchasbags,vehicleaccessories,furnishingaccessories,etc.
5BusinessloansforTradersandShopkeepers
Financialsupportforonlendingtoindividualsforrunningtheirshops/trading&businessactivities/serviceenterprisesandnonfarmincomegeneratingactivitieswith
beneficiaryloansizeofupto10lakhperenterprise/borrower.
6EquipmentFinanceSchemeforMicroUnits
Settingupmicroenterprisesbypurchasingnecessarymachinery/equipmentswithperbeneficiaryloansizeofupto10lakh.
MUDRACard
MUDRACardisaninnovativeproductwhichprovidesworkingcapitalfacilityasacashcreditarrangement.MUDRACardisadebitcardissuedagainsttheMUDRAloanaccount,
forworkingcapitalportionoftheloan.TheborrowercanmakeuseofMUDRACardinmultiplewithdrawalandcredit,soastomanagetheworkingcapitallimitinamost
efficientmannerandkeeptheinterestburdenminimum.MUDRACardwillalsohelpindigitalizationofMUDRAtransactionsandcreatingcredithistoryfortheborrower.
NationalPaymentCorporationofIndia(NPCI)hasgivenRuPaybrandingtoMUDRACardandalsoseparateBIN/IINforthesame,bywhichcredithistorycanbetracked.
MUDRACardcanbeoperatedacrossthecountryforwithdrawalofcashfromanyATM/microATMandalsomakepaymentthroughanyPointofSalemachines.
ThedesignoftheMUDRAcardasapprovedbyDFS,GoIandNPCIisgivenbelow.Bankscancustomizethesamebyincorporatingtheirlogoandname.

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DownloadJPEGFile.

Offerings

(/Default/DownloadFile/Mudra_Card_Front.jpg)

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PortfolioCreditGuarantee
TraditionalfinancinginIndiancontextadoptsanAssetBasedlendingapproachwithemphasisoncollaterals.Microunits,mostofthetimes,areunabletoprovidethecomfort
ofcollaterals.HenceMUDRAloansi.e.loansuptoRs.10lakh,havebeenmadecollateralfree,aspertheRBInormsinthisregard.
Tomitigatetheissueofcollaterals,MUDRAisofferingaCreditGuaranteeProduct.MUDRACreditGuaranteeisextendedbycreationofaFundcalledCreditGuaranteeFund
forMicroUnits[CGFMU]andtheschemehasbeennotifiedbyGoIvideitsnotificationdatedApril18,2016.Accordingly,alleligiblemicroloanssanctionedsinceApril08,
2015iscoveredundertheScheme.TheSchemeisbeingmanagedbyNationalCreditGuaranteeTrusteeCompanyLtd.[NCGTC],anagencypromotedbytheGOI.
Further,giventhecontextoftheindustry/segment,sincetheindividualloansizeswouldexpectedlybesmallandnumberofloanswillbelarge,MudraCreditGuaranteescheme
provideaPortfolioGuarantee.Underthis,CreditGuaranteeorRiskSharingisprovidedforaportfolioofhomogenousloansinsteadofaSchemeforindividualloanbyloan
guarantee.ThisisexpectedtocreateadministrativeefficienciesandincreasereceptivenessfortheCreditGuaranteeproduct.TheGuaranteeproductisoneofthekey
interventionsproposedwiththeobjectiveofbringingdownthecostoffundsfortheendbeneficiarytoimproveitscreditworthiness.
CreationofResourcesforCreditEnhancement/GuaranteeFacility
ThecorpusproposedfortheCreditGuaranteeSchemewouldberegularlyaugmentedwithachargeontheoutstandingloansunderrefinance.Thesamewouldbeutilizedfor
providingfirstlossguarantee/creditenhancementforsecuritizedportfolioloans,asdiscussedbelow4.
4Creditenhancement:Facilitiesofferedtocoverprobablelossesfromapoolofsecuritizedassetsintheformofcreditriskcoverthroughaletterofcredit,guaranteeorother

assurancefromtheoriginator/cooriginatororathirdpartytoenhanceinvestmentgradeinanysecuritizationprocess.Firstlossfacilityisthefirstlevelofcreditenhancement
offeredaspartoftheprocessinbringingthesecuritiestoinvestmentgrade.Secondlossfacilityprovidesthesecond/subsequenttierofprotectionagainstpotentiallosses.
DevelopmentandPromotionalSupport
Besidesthecreditconstraints,theNCSBsfacemanynoncreditchallenges,like,
SkillDevelopmentGaps
KnowledgeGaps
InformationAsymmetry
Financial/BusinessLiteracy
Lackofgrowthorientation
Toaddresstheseconstraints,MUDRAwilladoptacreditplusapproachandofferDevelopmentalandSupportservicestothetargetaudience.Itwillactasamarketmakerand
buildupanecosystemwithcapacitiestodelivervalueinanefficientandsustainablemanner.
ImpartingFinancial/BusinessLiteracy
Financial/businessliteracyorfinancialeducationcanbroadlybedefinedas'providingfamiliaritywithandunderstandingoffinancialmarketproducts,especiallyrewardsand
risks,inordertomakeinformedchoices.'
FinancialInclusionandFinancial/businessLiteracyaretwinpillars.WhileFinancialInclusionactsfromsupplysideprovidingthefinancialmarket/servicesthatpeopledemand,
FinancialLiteracystimulatesthedemandsidemakingpeopleawareofwhattheycandemand.Supportingthefinancialliteracydrivewillcontributesubstantiallyfromthe
demandsidetothenationalagendaoffinancialinclusion.

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ImpartingFinancial/BusinessLiteracy

Thisapart,themicroenterprisesegmentalsoneedsbusinessliteracywhichwillhelptheminacquiringknowledgeonrunning/managingbusiness,keepingaccounts,working
outratios,etc.
PromotionandSupportofGrassRootInstitutions
Oneofthemajorfocusareaswillbetoformalizeandinstitutionalizethelastmilefinanciers/grassrootinstitutionssothatanewcategoryoffinancialinstitutionsviz.Small
BusinessFinanceCompaniescanbecreatedandecosystemdevelopedfortheirgrowth.
Ruralinnovationsatmicroenterprise/unitlevelwouldalsobeoneofthekeyareasforinterventionandsupport.SupporttoMicrounitsbywayofthefacilityofincubators
wouldbetakenup.Thiswouldensurethatatthemostgrassrootlevelsinthecountry,thereisclimateforpromotionofinnovationaswellasincubationofideasfromeducated
ruralyouthswhichwouldgerminateinviablemicroenterprises.
CreationofFrameworkfor"SmallBusinessFinanceEntities"
Anenablingframeworkforsupportto"SmallBusinessFinanceEntities"wouldbecreatedleadingtoformalizationoftheeconomywhichispresentlyincludedintheinformal
sector.
SynergieswithMakeinIndiaCampaign
GovernmentofIndiahasinitiatedseveralstepsforencouragingenterprisecreationinourcountry.ThemajoroneisMakeinIndiamovement.MakeinIndiaisamajor
nationalprogrammedesignedtofacilitateinvestment,fosterinnovation,enhanceskilldevelopment,projectintellectualpropertyandbuildbestinclassmanufacturing
infrastructure.ThiscoupledwithStartupIndiaandStandupIndiacampaign,hascreatedaconduciveenvironmentofenterprisecreationindifferentscales.MUDRA,beingan
initiativeforpromotingmicroenterprises,fitswellwithMakeinIndiainitiativeforsupportingthesemicroenterprises.
SynergieswithNationalRuralLivelihoodsMission/NationalUrbanLivelihoodMission
TheNationalRuralLivelihoodsMission[NRLM]issetup"Toreducepovertybyenablingthepoorhouseholdstoaccessgainfulselfemploymentandskilledwageemployment
opportunities,resultinginappreciableimprovementintheirlivelihoodsonasustainablebasis,throughbuildingstronggrassrootsinstitutionsofthepoor."Toachievethe
above,NRLMMissioninteraliafollowsademanddrivenstrategyforcontinuouscapacitybuilding,impartingrequisiteskillsandcreatinglinkageswithlivelihoodopportunities
forthepoor,includingthoseemergingintheorganizedsector.
Similarly,theDeendayalAntodayaYojana[DAY]NationalUrbanLivelihoodMissionisanotherprogammewhichisaimedatreducingUrbanpovertythroughcreation
ofmicroenterprises,individuallyandgroupmode.
MUDRA,beinganinitiativeforpromotingmicroenterprises,wouldmakealleffortstodrawsynergiesbetweenNRLM,NULMandMUDRAinterventionsforsupportingmicro
enterprisesandcreatingsustainablelivelihoodopportunitiesforthepoor.
SynergieswithNationalSkillDevelopmentCorporation
NSDCisalreadyengagedintheprocessofskilldevelopmentataNationalscale.SynergizingwithNSDCwillhelpMUDRAinaugmentingtheskillsetsofthesectoralplayers.
WorkingwithCreditBureaus
Withthegrowthofresponsiblelendingpractices,CreditBureaus(CB)havegainedincreasinglevelofacceptabilityinthemicrofinancesector.TheCBculturewillhelpincreating
credithistoryoveraperiodoftimewhichwillfacilitatefastercreditdispensationasthesystemevolves.
WorkingwithRatingAgencies

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Accreditation/ratingofMFIentitiesisoneoftherolesearmarkedforMUDRA.Further,asegmentoffinancialintermediariesforthenoncorporatesmallbusinesssectoris
envisagedtoemergeinthefinancingarchitecture.MUDRAwouldworkincoordinationwithRatingAgenciessothatappropriateratingframework(s)whichtakeintoaccount
sectorspecificfeaturesaredevisedforvarioussectorparticipants.Inthelongerrun,availabilityofratingforsectorparticipantswouldfacilitateformalizationandfurtherflowof
capitaltothesector.
TheMUDRAPricing
AccesstofinanceiscriticalandequallycriticalisthecostoffinancetotheNCSB/ultimatebeneficiary.Thefundsmobilizedbymicrounitsfromtheinformalsourcesareatahigh
cost.Thereisscopeforcostrationalization.However,therationalizationisintricatelylinkedwiththecostoffundsforthelastmileMFIs.
GOIwhileannouncingtheformationofMUDRAalsoannouncedarefinancecorpusforMUDRAat20000crores,tobeallocatedbyRBIfromthePrioritySectorlending
shortfall.Accordingly,RBIhasprovidedtheallocationwhichhelpsinbringingdownthecostoflendingattheultimateborrowerlevelasMUDRArefinancewillreducethe
averageborrowingcostofthelendinginstitutions
TheNBFCMFIsarepresentlyregulatedbyReserveBankofIndiaandRBIhasalreadyprescribeddetailedguidelinesformargincapinrespectofMFIs.Themargincaphasbeen
peggedat10%forMFIshavingloanportfolioofmorethan100croreand12%forsmallerMFIshavingloanportfoliooflessthan100croreor2.75timestheaveragebase
rateoffivemajorcommercialbanks,whicheverisless.InthebackdropoftheseguidelinesandthefactthatMFIsectorhasbeenconstantlytryingtoreduceitscosts,MUDRA
wouldalsohelpMFIsreducetheircosttobringdowntheoverallcosttotheendbeneficiaries.Further,atthetimeofappraisal,MUDRAwouldbestudying/assessingindividual
MFIsonthisaswellasotherrelatedparametersandsuitablypriceitsassistancebasedonsuchassessment.
InthecaseofBanks,RBIhasalsoputacapontheinterestrateatBaserate/MCLRforlendingmicrounitsbyCommercialBanksbyavailingofMUDRArefinance.Similarly,the
RRBsandCooperativeshavebeengivenainterestcapof3.50%overandaboveMUDRArefinancerate,whilelendingtoMUDRAloanbyavailingofMUDRArefinance.
IncaseofNBFCs,RBIhasalsostipulatedainterestcapof6%overandaboveMUDRArefinancewhiletheirlendingtoMUDRAsegment.
AlltheseareexpectedtohaveapositiveimpactonthepricingofMUDRAloansinthecountrywherebytheMicroenterpriseswillbeabletoavailofcreditataaffordableinterest
rate.But,firstandforemostobjectiveistoensureaccessibilityofcredit.
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