The Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Union Government in 2015.
For providing loans upto Rs. 10 lakhs (around US$15,000) to the non-corporate, non-farm small/micro enterprises.
All banks viz. Public Sector banks, Private Sector Banks, Regional Rural Banks (RRBs), State Co-operative Banks, Urban Co-operative Banks, Foreign Banks and Non-Banking Finance Companies (NBFCs)/Micro Finance Institutions (MFIs) - are required to lend to non-farm sector income generating activities below Rs.10 lakhs. These loans are classified as MUDRA loans under PMMY.
For implementing the Scheme, government has set up a new institution named, MUDRA (Micro Units Development & Refinance Agency Ltd.), for development and refinancing activities relating to micro units, in addition to acting as a regulator for the micro finance sector, in general.
MUDRA provides refinance to all banks seeking refinancing of small business loans given under PMMY.
PMMY proposed to create MUDRA bank with a corpus of Rs. 20,000 crores made available from the shortfalls of priority sector lending, to refinance Micro-Finance Institutions through Pradhan Mantri Mudra Yojana.
The purpose of PMMY is to provide funding to the non-corporate small business sector. Non- Corporate Small Business Segment (NCSBS) consists of millions of proprietorship/ partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits/ vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas. According to the NSSO Survey of 2013, there are 5.77 crore small business units.
Loan offerings under PMMY
Shishu: covering loans upto Rs. 50,000/- provided with no collateral, @1% rate of interest/month repayable over a period of 5 years.