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ABSTRACT
Major problem being encountered by the entrepreneurs in the non-corporate small business sector is
the lack of financial support from the organized financial sector. Out of the total bank credit, less than
15% are available to MSMEs Priority Sector Lending. Though there is huge potential, a vast part of
the non-corporate sector operates as unregistered enterprises. Banks were reluctant to give credit
facilities to the unregistered non-corporate business enterprises, but with the refinancing facility from
MUDRA Bank, within a short period of its introduction, 66,00,261 enterprises have been given loans
under PMMY with Rs. 45,948.98 Crores being sanctioned and Rs. 42,521.28 Crores being disbursed.
According to the NSSO Survey of 2013, there are 5.77 crore small business units, mostly
proprietorship, which run small manufacturing, trading or service activities. Majority of such units do
not get institutional finance. Providing access to institutional finance to such micro/small business
units would turn them into strong instruments for GDP growth and also employment generation.
Mainstreaming these enterprises will not only help in improving the quality of life of these
entrepreneurs but will also contribute substantially to job creation in the economy leading to income
distribution and reduction in poverty.
Under this initiative, in North East India and especially in Manipur too, banks which are the partners
of MUDRA Bank have started providing Mudra Loans under three schemes – Shishu, Kishore and
Tarun. There is a need to assess the impact of these financing to MSMEs in the state and the
mechanism through which the banks are selecting the beneficiaries. It can be said that with the
introduction of this scheme, a great change is about to come especially in the development of Micro,
Small and Medium Enterprises.
The present study “Development of Micro, Small and Medium Enterprises through MUDRA Loans
with Special Reference to Manipur” will mainly focus on objectives of the PMMY Schemes, distinctive
features of this initiative, present status of the schemes in all the state and suggestions for the effective
implementation of the schemes.
Keywords: Mudra Loans, PMMY, Micro Business Units, MSMEs, Economic Development
INTRODUCTION
Major problem being encountered by the entrepreneurs in the non-corporate small business sector is
the lack of financial support from the organized financial sector. Out of the total bank credit, less than
15% are available to MSMEs. Though there is huge potential, a vast part of the non-corporate sector
operates as unregistered enterprises.
According to the NSSO Survey of 2013, there are 5.77 crore small business units, mostly
proprietorship, which run small manufacturing, trading or service activities. Majority of such units do
not get institutional finance.
Available online on www.abhinavjournal.com 55
Abhinav National Monthly Refereed Journal of Research In
Commerce & Management
Banks were reluctant to give credit facilities to the unregistered non-corporate business enterprises, but
with the refinancing facility from MUDRA Bank, within a short period of its introduction, 84,39,389
enterprises have been given loans under PMMY with Rs. 28,16,33,523 Crores being sanctioned and
Rs. 28,16, 29,770 Crores being disbursed.
Table No. 1: Size of MSMEs in India (in Millions)
Year Registered Unregistered Total Units
2006-2007 1.5 (6%) 24.6 (94%) 26.1
2009-2010 1.8 (6%) 28.0 (94%) 29.8
Source: MSME Census, Ministry of MSME, Annual Reports, 2009-2010
It is seen that majority of the MSMEs are unregistered in India. There is a need for special effort to
make them registered and bring them under monitored and regulated. This can be achieved with the
introduction of this PMMY where such a registration is compulsory.
Table No. 2: Percentage of Enterprises by Sources of Finance
Sources of Finance Self Finance Through Institutional Through Non-
Sources Institutional Sources
Percentage of 92.8% 5.2% 2.1%
Enterprises
Source: MSMEs Census, 2007
It can be clearly observed that most of these MSMEs are self financing. There is a need for bank and
institutional financing in order to expand their businesses and bring growth in the volume of
businesses.
DEFINING MUDRA LOAN
As per Department of Financial Services, Ministry of Finance, Govt. of India’s letterNo.27/01/2015-
CP/RRB dated May 14, 2015 loans given to non-farm income generating enterprises in manufacturing,
trading and services whose credit needs are below Rs.10 lakh by all the Public Sector Banks, Regional
Rural Banks, State Cooperative Banks and Urban Co-operative Banks will be known as MUDRA
Loans under the Pradhan Mantri MUDRA Yojana (PMMY).
In addition to these Banks, NBFCs and MFIs operating across the country can also extend credit to this
segment, for which they can avail financial assistance from MUDRA Ltd., subject to their conforming
to the approved eligibility criteria.
Table No. 3: Initial Products/Schemes of MUDRA
1. Shishu Covering Loans up to Rs. 50,000/-
2. Kishor Covering Loans above Rs. 50,000/- and up to Rs. 5 Lakh
3. Tarun Covering Loans above Rs. 5 Lakh and up to Rs. 10 Lakh