Small businesses to be aided through MUDRA Bank, says Finance Minister Arun Jaitley

Finance Minister Arun Jaitley on Friday said the government will help small entrepreneurs through the MUDRA Bank scheme.

"Following the MUDRA scheme, we will start a scheme so thatsmall entrepreneurs can get help and, in turn, contribute to the development and improvement of the financial condition of the nation," Jaitley said at the 99th birth anniversary celebration function of Pandit Deen Dayal Upadhyay.

Jaitley will hand over loan-sanction letters here to beneficiaries at a mega campaign organised by the Punjab National Bank (PNB).

The distribution of loan sanctions to borrowers by Jaitley is part of the mega credit campaign to be conducted by public sector banks across the country between September 25 and October 2.

The campaign is aimed at generating credit to micro enterprises and also to create an eco-system of bank credit to aspiring small and micro entrepreneurs under the Pradhan Mantri Mudra Yojana (PMMY).

"Micro entrepreneurs, very small traders, fruit sellers and mechanics etc. would be actively participating in the said campaign," a finance ministry statement said.

All public sector banks, regional rural banks and private sector banks have a target of Rs.1,22,000 crore during the current financial year for disbursement to small and micro enterprises.

The newly set up MUDRA (Micro Units Development and Refinance Agency) Bank is a public sector financial institution aimed at providing loans at low rates to microfinance institutions and non-banking financial institutions which then provide credit to MSMEs.

The MUDRA bank is going to provide succour to more than 5.77 crore small business units which can look forward to easy financial assistance from it, union Law Minister D.V. Sadananda Gowda said on Thursday.

MUDRA Ltd has been established as a subsidiary of SIDBI with an initial corpus of Rs.5,000 crore to provide capital to all banks seeking refinancing of small business loans under PMMY.

During the current fiscal up to September 22, a total of 35.60 lakh borrowers have availed credit totalling Rs.24,123 crore from MUDRA. Of these, 52 percent beneficiaries are women and around 50 percent are new enterprises.

PMMY loans do not need to be supported by collateral security.