Pradhan Mantri MUDRA Yojana

Cabinet has approved 2% Interest Subvention approved on prompt repayment of Shishu Loans under Pradhan Mantri MUDRA Yojana for a period of 12 months.

• The estimated cost of the Scheme would be approximately Rs. 1,542 crore which would be provided by the Government of India.
• This Scheme is for implementation of one of the measures relating to MSMEs, announced under the Atma Nirbhar Bharat Abhiyan.

Eligibility:

The scheme will be extended to loans which meet the following criteria – outstanding as on 31stMarch, 2020; and not in Non-Performing Asset (NPA) category, as per Reserve Bank of India (RBI) guidelines, on 31st March 2020 and during the period of operation of the Scheme.

The interest subvention would be payable for the months in which the accounts are not in NPA category including for the months that the account becomes a performing asset again, after turning NPA.

Implementation strategy:

The Scheme will be implemented through the Small Industries Development Bank of India (SIDBI) and will be in operation for 12 months.

Significance:

• The Scheme has been formulated as a specific response to an unprecedented situation and aims to alleviate financial stress for borrowers at the ‘bottom of the pyramid’ by reducing their cost of credit.
• It will incentivize people who will make regular repayments of loans.

About the Pradhan Mantri MUDRA Yojana (PMMY) scheme:

Launched in April, 2015. The scheme’s objective is to refinance collateral-free loans given by the lenders to small borrowers.

• Banks and MFIs can draw refinance under the MUDRA Scheme after becoming member-lending institutions of MUDRA.
• Mudra Loans are available for non-agricultural activities upto Rs. 10 lakh and activities allied to agriculture such as Dairy, Poultry, Bee Keeping etc, are also covered.
• Mudra’s unique features include a Mudra Card which permits access to Working Capital through ATMs and Card Machines.