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The MUDRA Bank: Micro Unit’s Fuel


  • MUDRA- Micro Units Development and Refinance Agency.
  • Prime Minister Narendra Modi will launch on April 8 the Rs 20,000 crore MUDRA Bank, an agency to refinance micro-finance institutions which will also act as regulator for the sector.
  • This bank would be responsible for regulating and refinancing all MFIs which are in the business of lending to micro or small business entities engaged in manufacturing, trading and services activities.
  • The bank would partner with state level/regional level coordinators to provide finance to last mile financier of small/micro business enterprises.
  • It would lay down policy guidelines for micro/small enterprise financing business, registration of MFI entities, regulation of MFI entities and accreditation /rating of MFI entities.
  • It will also frame guidelines for financing practices to ward-off indebtedness and ensure proper client protection principles and methods of recovery.
  • MUDRA Bank will have a corpus of Rs 20,000 crore, and credit guarantee corpus of Rs 3,000 crore.


  • The MUDRA Bank, which was announced by Finance Minister Arun Jaitley in his Budget speech, is expected to benefit about 5.77 crore small business units.
  • MUDRA Bank will refinance Micro-Finance Institutions through a Pradhan Mantri Mudra Yojana.
  • The aim is to provide loans at cheaper rates to those running small enterprises.


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