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Stand Up India Scheme & Coversion of MUDRA Ltd approved

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Union Cabinet has approved the “Stand Up India Scheme” to promote entrepreneurship among SC/ST and Women entrepreneurs. Under this, the government aims to achieve the target of at least 2.5 lakh approvals in three years from the launch of the scheme.

  • It envisages reaching out to under-served sectors of the population by facilitating bank loans repayable up to 7 years and between 10 lakh to Rs. 1 crore for Greenfield enterprises in the non-farm sector set up by such SC, ST and Women borrowers.

Key Highlights of Scheme

  • Refinance window through Small Industries Development Bank of India (SIDBI) with an initial amount of 10,000 crore.
  • The loan under the scheme would be appropriately secured and backed by a credit guarantee through a credit guarantee scheme for which Department of Financial Services would be the settler and National Credit Guarantee Trustee Company Ltd. (NCGTC) would be the operating agency.
  • Handholding support for borrowers at the pre loan stage and during operations.
  • Margin money of the composite loan would be up to 25%.

Coversion of MUDRA into Bank

Stand Up India Scheme & Coversion of MUDRA Ltd approvedThe cabinet also approved conversion of MUDRA Ltd, a non-banking financial company, into MUDRA Small Industries Development Bank of India (SIDBI) Bank, a wholly-owned subsidiary of SIDBI and also setting up of a Credit Guarantee Fund for loans disbursed under the Pradhan Mantri Micro Units Development Refinance Agency (MUDRA) Yojana.

  • A Credit Guarantee Fund for MUDRA Units (CGFMU) for guaranteeing loans – sanctioned under the scheme with effect from April 8, 2015 – will be set up.
  • MUDRA Bank and a Credit Guarantee Fund was proposed to be set up with a refinance corpus of Rs. 20,000 crore and a corpus of Rs. 3,000 crore respectively in the Budget 2015-16.

The National Credit Guarantee Trustee Company Ltd (NCGTC Ltd), a wholly-owned company of Government of India, constituted under the Companies Act to manage and operate various credit guarantee funds.

Under Pradhan Mantri Mudra Yojana, the government has set a target of Rs 1.22 lakh crore for loans to be given by banks in the current fiscal to promote new entrepreneurs and “fund the unfunded”.

  • Three products available under the PM MUDRA Yojana are Shishu which covers loans up to 50,000 while Kishor covers above Rs. 50,000 – Rs. 5 lakh. Tarun category provides loans of above Rs. 5 lakh – Rs. 10 lakh.