MUDRA Bank - Funding the Unfunded

Micro Units Development and Refinance Agency (MUDRA) Bank Dedicated Regulator and Refinancer

The Micro Units Development Refinance Agency (MUDRA) Bank is set to be launched on April 8th 2015 by our Honourable Prime Minister Shri Narendra Modi ji.
The Bank will start with a corpus of Rs 20,000 crore which would be allocated to the Bank from the money available from shortfalls of priority sector lending. Further amount of Rs 3000 crores will be allocated from Budget as a Credit Guarantee Corpus.

Key Responsibilities of MUDRA Bank
- Laying down policy guidelines for micro/small enterprise financing business
- Registration and Regulation of MFI entities
- Accreditation/rating of MFI entities
- Laying down responsible financing practices to prevent over indebtedness, ensuring client protection principles and methods of recovery
- Development of standardized covenants governing last mile lending to micro/small enterprises
- Promoting right technology solutions for the last mile
- Formulating and running a credit guarantee scheme for providing guarantees to the loans which are being extended to micro-enterprises

- Creating a good architecture of last mile credit delivery to micro businesses under the scheme of Pradhan Mantri Mudra Yojana

Benefits of Launching MUDRA Bank 
- Uniformity in regulations and best practices for the SHG Bank linkage programme, NBFC-MFIs, and trusts/societies/not for profit NBFCs/Section 25 companies engaging in MFI activities as MUDRA Bank would be the sole regulator for all players in the MFI sector.
- Increased liquidity and access to low cost funding support to MFIs
- Increased access to low cost funding for MFIs could lead to a reduction in the cost of funds for MFIs.

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