The Confederation of All India Traders (CAIT) has urged Finance Minister Arun Jaitley to free Mudra from the clutches of Reserve Bank of India by bringing in necessary legislation in Parliament.

Mudra should be made an independent regulator to effectively cater to the financial needs of non corporate sector. Such a step will be in accordance with the resolution of the Union Cabinet.

A CAIT statement said RBI has failed to ensure that adequate finances are available to small businesses in the country through the banking system.

Micro Units Development and Refinance Agency (MUDRA) was formed by the government to facilitate easy finance to last mile financiers which in turn will lend to actual borrowers since only 4% of non corporate sector could get finances from core banking sector, CAIT National President  B.C.Bhartia and Secretary General Praveen Khandelwal said.

“It is a landmark initiative of the Prime Minister Narendra Modi taken for the first time by any Government in 68 years of Independence, but for obvious reasons the Mudra loans are being disbursed by commercial banks instead of other financial institutions as originally conceived by the government. The colonial mind set of the banks and stringent conditions are debarring the actual beneficiary in obtaining Mudra loans,” they said.

Mudra needs to be at the top of a pyramid having different set of financial institutions in lower verticals of pyramid. The funds will flow from Mudra to existing Non Banking Finance Companies, Micro Finance Institutions, Trust, Societies, which will lend to Last Mile Financiers.

About 70 leading national Associations of non corporate sector lenders are members CAIT. It is their persistent demand led to setting up of Mudra.