While Rs 3,000 crore MUDRA Credit Guarantee Fund (CGF) will act as hedge against default of Rs 50,000 to Rs 10 lakh loan extended to small entrepreneurs, Rs 5,000 crore Stand Up India CGF will stand guarantee for Rs 10 lakh to Rs 1 crore loans to be provided to least 2.5 lakh SC/ST and women.
The government had given its approval to convert MUDRA Ltd (Non-Banking Finance Company), a venture of the Centre for funding small businesses, into MUDRA-SIDBI Bank, a wholly owned subsidiary of Small Industries Development Bank of India (SIDBI).
Under the ‘Stand Up India’ scheme, banks will provide loans at the “least applicable rate” of interest. Every bank branch, including private sector, will give loans between Rs 10 lakh and 1 crore to at least one SC/ST and one woman entrepreneur under the scheme.
According to Financial Services Secretary Anjuly Chib Duggal, the National Credit Guarantee Trustee Company Ltd (NCGTC) would be the Trustee for both the CGFs of MUDRA as well as Stand Up India.
The scheme will handhold borrowers both at the pre-loan stage and during operations.
The overall intent of the scheme is to leverage the institutional credit structure to reach out to under-served segments of the society by facilitating bank loans repayable up to 7 years for greenfield enterprises in the non-farm sector.
Under the Scheme, the margin money would be up to 25 per cent, while remaining would be funded by the bank. “The convergence with state schemes is expected to reduce the actual requirement of margin money for a number of borrowers,” it said.
As per Micro Units Development Refinance Agency (MUDRA) Yojana, “the MUDRA (SIDBI) Bank will undertake refinance operations and provide support services with focus on portal management, data analysis etc apart from any other activity entrusted or advised by Government of India”.
Three products available under the PM MUDRA Yojana are Shishu, Kishor and Tarun to signify the stage of growth and funding needs of the beneficiary micro unit or entrepreneur.
Shishu covers loans up to Rs 50,000 while Kishor covers above Rs 50,000 and up to Rs 5 lakh. Tarun category provides loans of above Rs 5 lakh and up to Rs 10 lakh.