Banking Awareness Study Notes for Bank Exams

Dear Readers,

With SBI PO, NIACL Assistant, BOB PO, Dena Bank PO, NICL AO and Bank of India, they all have a General Awareness section which is heavily filled with Banking Awareness Questions. Here we will discuss some terms related to Micro-Units Development & Refinance Agency (MUDRA); it will help you prepare well for upcoming Banking or insurance Examinations.

MUDRA, which stands for Micro-Units Development & Refinance Agency Ltd, is a financial institution being set up by Government of India for development and refinancing micro-units’ enterprises. It was announced by the Hon’ble Finance Minister while presenting the Union Budget for FY 2016. The purpose of MUDRA is to provide funding to the non-corporate small business sector through various Last Mile Financial Institutions like Banks, NBFCs, and MFIs.

The biggest bottleneck to the growth of entrepreneurship in the Non–Corporate Small Business Sector (NCSB) is the lack of financial support to this sector. More than 90% of this sector does not have access to formal sources of finance. GoI is setting up MUDRA Bank through a statutory enactment for catering to the needs of the NCSB segment or the informal sector for bringing them into the mainstream. Pending enactment of an act for MUDRA Bank, a Non-Banking Finance Company as MUDRA Ltd has been set up as a subsidiary of SIDBI.

Roles and responsibilities of MUDRA

MUDRA would be responsible for refinancing all Last Mile Financiers such as Non-Banking Finance Companies, Societies, Trusts, Section 8 Companies [formerly Section 25], Co-operative Societies, Small Banks, Scheduled Commercial Banks and Regional Rural Banks which are in the business of lending to micro/small business entities engaged in manufacturing, trading and services activities. MUDRA would also partner with State/Regional level financial intermediaries to provide finance to Last Mile Financier of small/micro business enterprises.

Under the aegis of Pradhan Mantri MUDRA Yojana (PMMY), MUDRA has already created its initial products/schemes. The interventions have been named ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur and also to provide a reference point for the next phase of graduation/growth to look forward to. The financial limit for these schemes is:-

(a) Shishu: - covering loans up to 50,000/-

(b) Kishor: - covering loans above 50,000/- and up to 5 lakh

(c) Tarun: - covering loans above 5 lakh to 10 lakh

MUDRA’s delivery channel is conceived to be through the route of refinancing primarily to Banks/NBFCs/MFIs. At the same time, there is a need to develop and expand the delivery channel at the ground level. In this context, there is already in existence, a large number of ‘Last Mile Financiers’ in the form of companies, trusts, societies, associations and other networks which are providing informal finance to small businesses.

Pradhan Mantri Mudra Yojana (PMMY) loans have been extended by all Public Sector Banks such as PSU banks, Regional Rural Banks (RRBs), Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions and Non-Banking Finance Companies. All loans sanctioned on or after April 08, 2015 up to a loan size of 10 lakh for non-farm income generating activities will be branded as PMMY loans.