MUDRA SCHEME

BY-
ANUSHA S GOWDA
 INTRODUCTION

MUDRA, which stands for “Micro Units Development and Refinance Agency Ltd”, is a financial institution in India that
was established in 2015 by the Government of India.

● It operates under the aegis of Ministry of Finance and serves as a specialized institution to promote financial support to
micro-enterprises and small businesses in the country.

● MUDRA’s primary focus is on providing funding and financial services to help micro and small enterprises meet their
credit needs and contribute to economic growth and job creation.
 HISTORY OF MUDRA

1. BACKGROUND AND CONTEXT:

Prior to the establishment of MUDRA, micro and small businesses faced challenge accessing formal credit from
traditional banking institutions. The need to provide financial assistance to this segment and promote their growth led to
creation of MUDRA.
2. LAUNCH OF MUDRA:
MUDRA was launched by the Prime Minister of India, Narendra Modi, on April 2015. The launch marked the official
start of MUDRA's operations and its commitment to supporting micro-enterprises and small businesses through targeted
financial products of services.
3. MUDRA AS A SCHEME;
MUDRA was initially launched as a scheme under the Pradhan Mantri MUDRA Yojana (PMMY), which is aimed at
providing financial support to micro and small entrepreneurs. The scheme encompasses various components, including
refinancing, credit guarantee, and financial products tailored to the needs of different stages of business development.
4. THREE LOAN CATEGORIES:
MUDRA offers loans to micro and small businesses under three categories based on the loan amount;
a) Shishu : Loans up to ₹50,000
b) Kishore : Loans from ₹50,001 to ₹5 lakhs
c) Tarun : Loans from ₹5,00,001 to ₹10 lakhs
Each category is designed to cater the businesses at different growth stages, from early startups to more established
enterprises.

5. CREDIT GURANTEE FUND:

It provides credit guarantee coverage to lenders for loans extended to micro and small businesses. This initiative
aims to encourage financial institutions to lend to these businesses without hesitation.

6. DIGITAL INITIATIVES AND OUTREACH:

MUDRA leveraged digital technology to enhance accessibility and simplify the loan application process. It also
launched extensive awareness and outreach campaigns to educate potential borrowers about its services and
the benefits.
 ROLES AND FUNCTIONS OF MUDRA

1. Microfinance Support:
MUDRA provides financial assistance to micro-enterprises, including small businesses, self-employed individuals, and
small vendors, through various financial products.

2. Refinancing:
MUDRA refinances microfinance institutions (MFIs), banks, and non banking financial companies (NBFCs) that extend
credit to micro and small enterprises.

3. Credit Guarantee:
MUDRA offers a Credit Guarantee Fund to provide credit guarantee cover to lenders for loans given to micro and small
businesses, reducing the risk associated with lending to this segment.

4. Financial Products:
MUDRA offers three categories of loans to cater to different stages of business development: Shishu (up to ₹50,000),
Kishore (₹50,001 to ₹25 lakh), and Tarun (₹25,00,001 to ₹10 lakh).
5. Promotion of Entrepreneurship:
MUDRA encourages entrepreneurship among underserved and financially excluded segments of the population,
including women entrepreneurs.

6. Capacity Building:
MUDRA supports skill development and capacity building initiatives to enhance the entrepreneurship skills of
micro and small business owners.

7. Awareness and Outreach:

MUDRA undertakes awareness campaigns and outreach programs to educate micro-entrepreneurs about its
services and the benefits of formal financial assistance.

8. Digital Initiatives:
MUDRA embraces digital technology to streamline loan application processes, increase accessibility, and
improve customer experience.

9. Investment Research:
UTI AMC's investment team conducts research and analysis of financial instruments, industries, and market trends
to make informed investment decisions that align with the objectives of the mutual fund schemes.
10. Performance Evaluation:
UTI AMC evaluates the performance of the mutual fund schemes it manages and compares their
performance against benchmarks and industry peers. This helps in making necessary adjustments to achieve
optimal results.

11. Compliance and Governance:

UTI AMC ensures that its operations adhere to regulatory guidelines set by SEBI and other relevant
authorities. It maintains transparency, follows ethical practices, and upholds investor interests.
 STATE FINANCIAL
CORPORATION(SFC)
 MEANING:

• State Financial Corporations are institutions established by

the respective state governments to promote and provide
financial assistance to small and medium enterprises
(SMEs) and industries within the state. SFCs offer various
financial services, including term loans, working capital
loans, equipment financing, and more, to support the
growth and development of industries at the state level.
 HISTORY OF SFCS:

• Punjab Government set up State Financial Corporation in 1953. Now

there are 18 SFCs functioning in different states of India. Out of these,
17 were set up under the SFCs Act, 1951. Tamil Nadu Industrial
Investment Corporation Ltd. was established in 1949 under the
Companion Act but also functions as SFC. These institutions are
closely modeled on the lines of the IFCI with the difference in scope of
their activity.
 FEATURES OF SFC:

• 1. State government establish a financial corporation for the state.

• 2. The Share capital shall not exceed Rs. 2 crores and the issue of
shares to the public will be limited to 25% of the share capital and the
rest will be held by other financial institutions.
• 3. Shares of the corporation will be guaranteed by State government as
to the repayment of principal and payment of dividends will be
prescribed by central government.
• 4. The corporation will be authorized to issue bonds and debentures.
• v) The corporation may accept deposits from the public repayable after
not less than five years, subject to the maximum not exceeding the paid
up capital.
• vi) The corporation will be managed by a board consisting of a
majority of Directors nominated by the State governments, The
Reserve banks and the Industrial Finance Corporation of India.
• vii) The corporation will be authorized to make long term loans to
industrial concerns which are repayable within 25 years.
• viii) Until a reserve fund is created equal to the paid up share capital of
the Corporation and until the State Governments has been repaid all
amounts paid by them, if any, in fulfillment of the guarantee liability,
the rate of dividend shall not exceed the rate guaranteed by the state
government. Under no circumstances shall the dividend exceed 5 %
p.a. and surplus profits will be re payable to the State governments.
• ix) The corporation will have special privileges in the matter of
enforcement of its claims against borrowers.
 OBJECTIVES OF SFC:

i) To provide medium and long-term financial assistance to small

industrial enterprises particularly in circumstances when normal
banking facilities are not available.
ii) ii ) To assist for satisfying medium and long-term capital
requirements.
iii) iii ) To underwrite the issue of shares, bonds and debentures of
industrial concerns.
iv) iv) To subscribe to shares, bonds and debentures of industrial
concerns.
v) v)To provide assistance to new as well as existing industrial concerns
for the purpose of establishment, modernization, renovation,
expansion and diversification.
 FINANCIAL RESOURCES:

• The SFC's mobilize their financial resources from the following sources:
• 1. Their own Share capital.
• 2. Sale of bonds.
• 3.Income from investment and repayment of loans.
• 4. Loans from IDBI.
• 5. Borrowings from the Reserve Bank of India.
• 6. Deposits from the Public.
• 7. Loans from State Governments.
 FUNCTIONS OF SFC:

• 1. The SFC's while giving loans to industrial units see to it that loans are
secured by a Pledge, Mortgage, Hypothecation of movable and immovable
property or other tangible assets or guarantee by the state government or
scheduled commercial bank, they also accept personal pledge by the
entrepreneur. SFC's don't give loans on the basis of second mortgage.
• 2. Grant loans or advances to industrial concern repayable within a period not
exceeding 20 years.
• 3. Providing guarantee for loans raised by industrial units from commercial
banks and state cooperative banks.
• 4.Providing guarantee for deferred payments in cases where industrial units
have purchased capital goods on a deferred payment basis.
• 5. Guarantee loans raised by industrial concerns which is re- payable
within a period not exceeding 20 years and which are floated in the
public market.
• 6. SFC's grant loans to industrial units for the purchase of fixed capital
assets like land, machinery. In some exceptional cases, some SFC's also
provide loans for working capital requirements in combination with
loans for fixed capital.
• 7. SFC's provide loans in foreign currency for the import of machinery
and technical know- how, under the IDA (International development
association) and World Bank tie up.
• 8. SFC's however are prohibited from subscribing directly to the shares
or stock of any company having limited liability except for
underwriting purposes and granting any loans or advance on the
security of its own shares.
THANK YOU