Mudra loan
Micro Units Development and Refinance Agency Limited or MUDRA is a flagship initiative of the Indian Government aiming to provide funds to various businesses in a rural and urban area of the country. MUDRA loan was announced on 8th April 2015, and by the financial year of 2018-19, this policy has managed to sanction almost 6 crore loans.

Impact of MUDRA Loan –

  1. Job creation
Within the first 33 months of inception, the MUDRA loans helped create around 1.12 crore jobs. Out of these, 51.06 lakh are self-employed individuals, while 60.94 lakh are hired employees. A report by Labour Bureau under the Ministry of Labour and Employment reflects that this loan has created a total of 5.4 crore jobs till date. Percentage of jobs each MUDRA loan created –
  • Shishu – 66%.
  • Kishore – 18.85%.
  • Tarun – 15.51%.
  1. Entrepreneurship creation
A survey done revealed that 9% of the borrowers quit their existing jobs to start a business. On the other hand, around 6% of beneficiaries were unemployed before starting their venture.
  1. Growth of women entrepreneurship
As per reports from the Ministry of Finance (MoF), close to 70% of beneficiaries of Pradhan Mantri MUDRA Yojana are women.
  1. First-time loan borrowers
Around 80% of the beneficiaries were first-time loan borrowers. The MUDRA Yojana has played a critical role in providing financing to small businesses that found it hard to avail loans from commercial lenders. Additionally, close to 49% of borrowers have opted for financial intuitions to secure such loans. Several such lenders took several steps to raise awareness about this campaign locally.
  1. Establishing vs. expanding
Around 20.6% of the borrowers used a MUDRA loan to establish a business while the rest utilised it to expand their existing operations. Overview of MUDRA Yojana Loans under MUDRA are divided into the following –
  • Shishu – This loan is applicable for the entrepreneurs who are starting their business. The only norms under this policy are that the borrower has to provide supplier details and valid quotations. By meeting the essential eligibility criteria, an individual can avail up to Rs.50000.
  • Kishore – The second type of loan an individual can under the provision of Pradhan Mantri MUDRA Yojana is Kishore. Entrepreneurs who want to expand their business can apply for this loan. By fulfilling a few terms and conditions, an entrepreneur can avail from Rs.50001 to Rs.5 lakh.
  • Tarun – The third category of MUDRA Loan is called Tarun. An entrepreneur of an established business aiming to expand it further can avail advances under this category. The highest amount of sanctioned in this category is up to Rs.5 lakh.
The MUDRA Yojana aims to provide financial assistance for the growth of various business sectors. To avail the benefits, an individual or an organisation should follow the required eligibility criteria to apply for mudra loan. They must belong to the following sectors –
  • Vegetable and fruit sellers.
  • Small manufacturers.
Other than government initiatives like MUDRA loan, an entrepreneur can avail financing extended by private lenders like a business loan. It is an unsecured loan; hence, an individual does not need to use their property as collateral. Financial institutions like Bajaj Finserv provide various beneficial features on such loans. The company provides pre-approved offers to make the process of loan application uncomplicated and save the time of borrowers. Government financing like a MUDRA loan helps an entrepreneur to avail financial assistance, which is also applicable for the advances extended by private lenders. Additionally, NBFCs are changing the business loan landscape in India, which leads to the overall growth of this industry.

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