SME Times News Bureau | 07 Jan, 2016
The Union Cabinet, chaired
by Prime Minister Narendra Modi, has gave away its nod to covert MUDRA Ltd to
MUDRA Small Industries Development Bank of India (MUDRA SIDBI Bank) - a
wholly owned subsidiary of Small Industries Development Bank of India
(SIDBI).
The union cabinet on Wednesday approved the setting up of a credit
guarantee fund for loans of Micro Units Development & Refinance
Agency Ltd or MUDRA Bank.
The fund is expected to guarantee more
than Rs.100,000 crore worth of loans to micro and small units in the
first instance, the government said.
Finance Minister Arun Jaitley in his budget speech for
2015-16 had said MUDRA Bank and a credit guarantee fund was proposed to
be set up with a refinance corpus of Rs.20,000 crore and Rs.3,000 crore
respectively.
Prior to the launch of the Pradhan Mantri MUDRA
Yojana (PMMY) in April, 2015, MUDRA Ltd. was set up as a subsidiary of
SIDBI in March, 2015.
The Reserve Bank of India (RBI) has
allocated Rs 20,000 crore and the first tranche of Rs.5,000 crore has
been received by MUDRA as refinance.
The credit guarantee fund is set up to guarantee loans given under Pradhan Mantri Mudra Yojana.
This is done to reduce the credit risk to banks, non-banking finance companies and others who are member lending institutions.
The guarantee would be provided on portfolio basis to a maximum extent of 50 percent of amount in default in the portfolio.
The
National Credit Guarantee Trustee Company Ltd., a Government of India
company that manages and operates various credit guarantee funds will be
the fund Trustee.
According to the statement the MUDRA (SIDBI)
Bank will undertake refinance operations and provide support services
with focus on portal management; data analysis and other activities as
specified by the government.
The cabinet meeting chaired
by Prime Minister Narendra Modi also gave its nod to covert MUDRA Ltd to
MUDRA Small Industries Development Bank of India (MUDRA SIDBI Bank) - a
wholly owned subsidiary of Small Industries Development Bank of India
(SIDBI).