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Modi launches bank for small firms with Rs.20,000 crore corpus
New Delhi, April 8
Prime Minister Narendra Modi
on Wednesday launched a bank with a corpus of Rs.20,000 crore to extend
credit of up to Rs.10 lakh to small businesses and regulate
micro-finance institutions, to promote their growth, add to the
country's output and create jobs.
The move is aimed at benefiting
some 58 million small businesses in the country, who account for a mere
four percent of institutional funding, despite employing over 120
million people, many from unprivileged strata of society, the officials
said.
"After 'banking the un-banked' with the Jan Dhan Yojana,
it's time to 'fund the unfunded'," the prime minister said at an event
to launch what is called Micro Units Development and Refinance Agency -
Mudra.
"Mudra is our innovation of funding the unfunded," the prime minister said.
"Millions
of common men and women in this country, who run small businesses, have
almost remained outside the net of formal institutional finance, in
spite of their large contributions to the economy," he said at the
event, attended, among others by Finance Minister Arun Jaitley.
"Providing
access to institutional finance to such micro and small business units
and enterprises will not only help in improving the quality of life of
these entrepreneurs, but also turn them into strong instruments of
growth and employment generation," the finance ministry said.
The
initiative will also lay down the norms for responsible financing
practices for micro-finance institutions so that the small businesses do
not face hardship over indebtedness, while getting a fair environment
for repayment.
In his budget speech delivered on February 28, the
finance minister had said that while are were 5.77 crore small
businesses in India, mostly individual proprietorships, these
bottom-of-the-pyramid entrepreneurs found it difficult, if not
impossible, to access formal systems of credit.
"I, therefore,
propose to create a Micro Units Development Refinance Agency (Mudra)
Bank, with a corpus of Rs.20,000 crore and a credit guarantee corpus of
Rs.3,000 crore. Mudra Bank will refinance micro-finance institutions
through a Pradhan Mantri Mudra Yojana," he added.
"These measures
will greatly increase the confidence of young, educated or skilled
workers who would now be able to aspire to become first generation
entrepreneurs; existing small businesses, too, will be able to expand
their activities."