What is the MUDRA scheme?
MUDRA (Micro Units Development and Refinance Agency Ltd) is a government-led non-banking company that offers financing for small and micro Indian enterprises. It is part of the government’s flagship scheme called PMMY, also known as the ‘Pradhan Mantri Mudra Yojana’ or ‘MUDRA scheme.’ PMMY currently provides loans of up to Rs. 10 lakhs to small entrepreneurs across the country. There are three categories of loans as part of the MUDRA scheme: MUDRA Tarun, MUDRA Kishore and MUDRA Shishu Yojana.
Each of the categories offers a range of amounts as loans to self-proprietors, shop owners, and other such individuals based on their business’s growth stage and financial need. The Shishu loan offers amounts up to ₹50,000 sized loans. MUDRA Kishore offers loans between ₹50,000 and ₹5 lakh. The MUDRA Tarun offers loan amounts of anywhere between ₹5 lakh to ₹10 lakhs. As per the official website, the MUDRA Yojana scheme has helped 12 crore beneficiaries and created 5.5 crore job opportunities since its launch in April of 2015.
PMMY partners with Private Companies to Expand its Reach
On Wednesday, the Indian government announced that it has joined hands with numerous private industries like Amazon, Amul, Flipkart, Ola, Uber, Oyo, and Zomato. The goal is to provide MUDRA Yojana loans to small businesses associated with these companies. It operates with the goal of funding the unfunded and is made to bring more small Indian enterprises into the country’s formal financial system. With this partnership, the MUDRA scheme aims to strengthen its backward and forward linkages with robust value chains that are anchored by industries. Here’s how.
This partnership with popular Indian private industries allows PMMY to come into contact with many thousands of proprietors, and small entrepreneurs. Hence, it expands the scope of aid provided by the MUDRA scheme. According to the financial services secretary, Rajiv Kumar, MUDRA loans under this new partnership by PMMY will be anchored by industries and maintain their focus on the value chain. According to Kumar, the private companies PMMY has partnered with like Flipkart, Ola, Zomato, and Uber have small entrepreneurs of their own who may be in need of loans. Those entrepreneurs will directly benefit from this partnership.
Kumar stated that the cab aggregators alone (Uber, Ola, and Meru) have created more than 35,000 potential entrepreneurs that could make use of MUDRA loans from PMMY. Beyond the cab aggregators from the transport sector of India, a slew of other companies from differing industries are part of the new partnership. These include Make My Trip (travel), Big Basket (FMCG), Amul (FMCG), and more. Hence, with this new partnership, PMMY has enabled its outreach to multiple Indian industries who usually work with microbusinesses in need of loans.
For example, Kumar explains how working with Amul creates new possibilities for MUDRA loan eligibility. Amul works with small businesses and self-proprietors that work in milk parlors, cold rooms, cattle financing, milking machines, and more. PMMY has created a three-way partnership with these microbusinesses that may be in need of loans. There are 3.6 million members that are a part of Amul, and PMMY now has the option to come in contact with these micro FMCG and agro-businesses. The goal of PMMY for these particular individuals will be to increase their non-farm income by financing their micro-businesses.
Similarly, with each of the other industries – be it transport, personal services, or retail – PMMY is made available to individuals who are in need of it the most. Kumar added that there are numerous jobs one can work such that for MUDRA loan eligibility. However, it’s important to note that, as of now, traditional jobs like transportation, construction, textile-work, agro-businesses, are more, qualify for MUDRA loan eligibility. With the help of this partnership, more jobs can now fall under the umbrella of jobs eligible for MUDRA loans.
For instance, Kumar tweeted that PMMY’s new partnership with Oyo has led Oyo to propose that MUDRA Yojana target 80,000 room providers with a guarantee to receive MUDRA loans. These include those individuals and micro-businesses who offer escrow arrangements, co-sharing services, room hosting services, and more. Homestays are a relatively new but extremely lucrative market in India’s hospitality and travel sector. This proposal by Oyo creates enormous potential for all the small homestay businesses and room hosting services spread across India.
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