Finance Minister Arun Jaitley will kick-start a week long credit campaign today under Pradhan Mantri Mudra Yojana (PMMY) with the objective to fund the unfunded in the informal sector.
Mega credit campaigns are being conducted all over the country by banks from September 25 to October 2 to fund such enterprises and create a sound economic system subsequently by providing bank credit to aspiring entrepreneurs, especially small and micro entrepreneurs, an official statement said.
Finance Minister Arun Jaitley would participate in one of such campaigns and would hand over the loan sanction letters to beneficiaries here at an event to be organised by Punjab National Bank, it added.
All public sector banks, regional rural banks and private sector banks have set a target of Rs 1.22 lakh crore during the current financial year for disbursement to small and micro enterprises up to Rs 10 lakhs.
MUDRA Ltd has been established as a subsidiary of SIDBI with an initial corpus of Rs 5,000 crore to provide capital to all banks seeking refinancing of small business loans under PMMY.
“PMMY is a significant initiative by the government to secure bank finance to the vast segment of the population occupied in the informal sector which does not have access to formal bank credit and is forced to rely on informal sources of finance at high cost,” the statement said.
There are about 5.77 crore small business units in the country in the informal sector which is targeted for availing the benefit under the PMMY, apart from new aspiring micro entrepreneurs.
“Once this unfunded or underfunded segment of the economy is included in the mainstream of bank finance, the lower cost of debt should enhance livelihoods while also bringing them into the growth stream of the economy,” it added.
During the current financial year 2015-16, up to September 22, a total of 35.60 lakh borrowers have availed of credit under MUDRA to the tune of Rs 24,123 crore.
Of these, 52 per cent beneficiaries are women and about 50 per cent new enterprises.
As per guidelines, such loans do not need to be supported by collateral security.
PMMY loans fall into three categories – Shishu (up to Rs 50,000), Kishore (Rs 50,000-Rs 5 lakh) and Tarun (Rs 5 lakh-Rs 10 lakh).
The current focus of the government is on Shishu category of micro loans which encompass a range of small activities like shop-keepers, fruit sellers, vegetable vendors, mechanics, barbers, cobblers, small manufacturing units and a lot of other small service sector enterprises which borrow from money lenders and informal sources, it added.