PM asks bankers to adapt micro finance models to local requirements

The establishment of MUDRA would not only help in increasing access of finance to the unbanked, but also bring down the cost of finance from the Last Mile Financiers to the informal micro/small enterprises sector.

The Dollar Business Bureau Micro Credit The Prime Minister, Narendra Modi has asked the bankers to study the successful micro finance models being followed in other parts of the world and try to adapt them according to the local requirements. Speaking after the launch of the Pradhan Mantri Mudra Yojana aimed at funding the small entrepreneurs of India, Modi said that while there are a number of facilities provided for the large industries in India, there is a need to focus on 5 crore 75 lakh self-employed people who use funds of Rs 11 lakh crore, with an average per unit debt of merely Rs 17,000 to employ 12 crore Indians, reported a PIB release. The Prime Minister said that MUDRA scheme is aimed at “funding the unfunded”. MUDRA will build on experiences of some of the existing players, who have demonstrated ability to cater to the Non Corporate Small Business segment to build a financing architecture and right ecosystem for both the entrepreneurs as well as the last mile financiers to the segment. Access to finance in conjunction with rational price is going to be the unique customer value proposition of MUDRA. The establishment of MUDRA would not only help in increasing access of finance to the unbanked but also bring down the cost of finance from the Last Mile Financiers to the informal micro/small enterprises sector. The approach goes beyond credit only approach and offers a credit – plus solution for these myriad micro enterprises, creating a complete ecosystem spread across the country. Union Finance Minister, Arun Jaitley in his address, said that 20% of the people are dependent on micro enterprises and most of them are based on self-employment. He said that the Government has already launched various schemes for the poor and vulnerable sections of the society in the form of accident insurance, life insurance and pension schemes, and now trying to ensure that health insurance schemes are also made easily accessible/extended to this section of the society. Jaitley said that under Pradhan Mantri Mudra Yojana, micro entrepreneurs will be sanctioned loans ranging from Rs. 50,000/- to Rs. 10 lakhs.