The
Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has given its
approval for the creation of a Credit Guarantee Fund for Micro Units
Development Refinance Agency (MUDRA) loans and to convert
MUDRA Ltd. into MUDRA Small Industries Development Bank of India
(SIDBI) Bank as a wholly owned subsidiary of SIDBI.
The Fund is expected to
guarantee more than Rs 1,00,000 crore worth of loans to micro and small units
in the first instance.
The salient features
of the scheme are as follows:
(i)
Establishment of Credit Guarantee Fund for MUDRA
Units(CGFMU) for guaranteeing loans sanctioned under Pradhan Mantri Mudra
Yojana with effect from 8th April, 2015 with
the objective to reduce the credit risk to Banks / NBFCs / MFIs /
other financial intermediaries, who are Member Lending Institutions
(MLIs).
(ii)
The National Credit Guarantee Trustee Company Ltd. (NCGTC Ltd.),
a wholly-owned company of Government of India, constituted under the
Companies Act, 1956 (2013) to manage and operate various credit
guarantee funds, shall be the Trustee of the Fund.
(iii)
The guarantee would be provided on portfolio basis to a
maximum extent of 50% of Amount in Default in the portfolio.
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/
advised by Government of India.
Background:
MUDRA
Bank and a Credit Guarantee Fund was proposed to be set up with a refinance
corpus of Rs. 20,000 crore and a corpus of Rs.3,000 crore respectively as per
the Budget Speech for 2015-16. As a precursor to the launch of the
Pradhan Mantri MUDRA Yojana (PMMY) in April, 2015, MUDRA Ltd. was set up
as a corporate subsidiary of SIDBI in March, 2015. The RBI has allocated Rs
20,000 crore and the first tranche’ of Rs 5000 crore has been received by MUDRA
as refinance.
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AKT/VBA/SH