MUDRA – The Road Ahead…..

JIJI MAMMEN, CEO, MUDRA

EmpoweringMicro,
Micro,पपSmall
Small &&ककMedium Enterprises
Empowering पपपजपजज जसफलतत
सफलतत ककककपककजज
Medium प जज Enterprises
 Genesis of MUDRA
 Budget for 2015-16, proposed to create a Micro Units Development &
Refinance Agency (MUDRA) Bank for regulating and refinancing micro
finance institutions.

 To bridge the gap in last mile financing in partnership with scheduled

banks / Regional Rural Banks (RRBs) / cooperative banks, Non-Bank
Finance Companies (NBFCs) / MFIs etc.

 “Funding the un funded” is the objective of MUDRA

 To serve to lay down policy guidelines governing financing of target

businesses and development of standardized set of covenants
governing last mile lending

EmpoweringMicro,
Micro, Small
Small &Medium
Medium जजEnterprises
Empowering पपपपपजपजज जसफलतत
&सफलततककककककपककजज
प Enterprises
 Need for MUDRA
 As per National Sample Survey Office (NSSO) survey (2013), there are
57.7 million small/ micro units in the country, employing around 120
million people.
 Mostly individual proprietorship / ‘Own Account Enterprises’
 Over 60% of units owned by persons belonging to vulnerable sections
like Scheduled Castes (SCs), Scheduled Tribes (STs) or Other
Backward Classes (OBCs)
 Majority of these units are outside the formal banking system –
borrow from informal sources, use own funds
 By creating a good architecture of Last Mile Credit Delivery to micro
businesses, MUDRA will aim to increase the confidence of the aspiring
young persons to become first generation entrepreneurs as also of
existing small businesses to expand their activities

EmpoweringMicro,
Micro, Small
Small &&Medium
Medium Enterprises
Empowering पपपपपजपजज जसफलतत
सफलततककककककपककजज
प जजEnterprises
 Objective of MUDRA
• Defining policy guidelines for micro enterprise financing
business
• Registration of MFI entities
• Accreditation /rating of MFI entities
• Laying down responsible financing practices
• Development of standardised set of covenants governing last
mile lending to micro enterprises
• Promoting last mile technology solutions
• Formulating and running a Credit Guarantee Scheme for
micro lending
• Support development & promotional activities in the sector
• Creating a good architecture of Last Mile Credit Delivery to
micro businesses under the scheme of Pradhan Mantri
MUDRA Yojana

EmpoweringMicro,
Micro, Small
पपSmall &&Medium
Medium
पपपजपजज जसफलतत
सफलतत Enterprises
Empowering ककककककपककजज
प जज Enterprises
4
4
 MUDRA Architecture
How MUDRA can work with Banks – The new financial architecture

MUDRA
Regional Regional
Aggregators Aggregators
BANKS
PSBS

SBFCs / small NBFCs /Micro SBFCs /small NBFCs / Pvt CBs

Finance Institutions ( MFIs) Micro Finance Institutions RRBs
Coop

Micro Enterprises (loans upto Rs. 1 million)

EmpoweringMicro, पपSmall
पजपजज जसफलतत
Micro, पपSmall सफलततककककककपककजज
प जज Enterprises
Empowering &&Medium
Medium Enterprises
 MUDRA Ltd at a glance
 MUDRA Ltd launched as a NBFI, pending enactment of
Parliament, by Hon’ble Prime Minister, on 08 April 2015 and
commenced its opérations
 Allocation of Rs.20,000 crore as corpus fund for refinance
made by RBI in May 2015; Rs 5000 cr received
 Eligibility norms for partner institutions firmed up
 140 partner institutions- 79 banks 36 MFIs ( including 5 non
NBFC mFIS), and 25 NBFCs shortlisted as partners
 Rs 825 cr sanctioned to 14 mFIs/ NBFC and 4 banks; Rs
340 cr disbursed to 7 MFIs/ NBFCs + 4 banks

EmpoweringMicro,
Micro, Small
Small &&Medium
Medium Enterprises
Empowering पपपपपजपजज जसफलतत
सफलततककककककपककजज
प जज Enterprises
 MUDRA Card
 A hassle free credit to small borrowers; Loan withdrawal
on demand with flexibility in operation.
 A co-branded card with MUDRA and the issuing bank,
issued directly or in association with MFI.
 Mudra Card- Debit card on RuPay platform; operable on
ATMs and POS machines.
 Most of the PSBs, and 3 RRBs have launched the product
 MUDRA to provide refinance / credit guarantee against
loans granted under MUDRA Card.
 About 1.49 lakh cards issued for Rs 380 crore
 Saija + IDBI bank issued cards in Bihar

EmpoweringMicro,
Micro, Small Small &&Medium
Medium Enterprises
Empowering पपपपपजपजज जसफलतत
सफलततककककककपककजज
प जज Enterprises
 MUDRA Card (contd..)
 MUDRA to provide refinance / credit guarantee against loans
granted under MUDRA Card.
 Layout / design for MUDRA card, approved by NPCI,
circulated to all Banks; revise design suggested by DFS also
circualted
 RBI approved MUDRA card subject to non participation of
risk by NBFCs/ MUDRA

EmpoweringMicro, पपपजSmall
ज
प ज जसफलतत
Micro,पपSmall सफलततककककककपककजज
प जज Enterprises
Empowering &&Medium
Medium Enterprises
New Mudra card design

EmpoweringMicro, पपपजSmall
ज
प ज जसफलतत
Micro,पपSmall सफलततककककककपककजज
प जज Enterprises
Empowering &&Medium
Medium Enterprises
9
9
Pradhan Mantri Mudra Yojana(PMMY)
 All loans issued by banks to micro enterprises with credit needs below
Rs. 10 lakh.
 A target of Rs.122118 crore set under PMMY for FY 2015-16 with 20%
for Shishu, 50% for Kishore and 30% Tarun.
 Mudra loans to be governed by MUDRA Charter.
 Refinance / credit guarantee to be provided from MUDRA.
 Special module to capture daily progress in credit camp target
 Special campaign on Shishu laons from 1 Sept to 02 October 2015
achieved sanction of 22.50 lakh Shishu laons with Rs 4150 cr
 As on 09 October 2015, Rs 37285 crore for 60 lakh borrowers
disbursed
 Shishu – Rs 8878 cr ( 50.12 lakh a/c)
 Kishore - Rs 17492 cr ( 8.50 lakh a/c)
 Tarun - Rs 10915 cr ( 1.44 lakh a/c

EmpoweringMicro,
Micro, Small Small &&Medium
Medium Enterprises
Empowering पपपपपजपजज जसफलतत
सफलततककककककपककजज
प जज Enterprises
 MUDRA – Road Ahead
 MUDRA as Refinancer
 Providing refinance support to MFIs
 Providing support for double intermediation
 Market maker; securitization/ assignment/ bond issue

 MUDRA as regulator
 MUDRA charter
 Legislation of Mudra Bank Act
 Accreditation/ registration/ regulation??
 Functional Regulation through MUDRA charter
 Off site surveillance of mFIs?

EmpoweringMicro,
Micro, Small Small &&Medium
Medium Enterprises
Empowering पपपपपजपजज जसफलतत
सफलततककककककपककजज
प जज Enterprises
 MUDRA – Road Ahead

 MUDRA as ecosystem facilitator

 Mudra Guarantee Fund
 Capacity building through training, IT enablers
 New products- Mudra card
 shift from cash based to digital; virtual cards
 Enabling reduction in ultimate interest rates
 IT platform – supporting entire ecosystem
 Providing feed back micro finance ecosystem

EmpoweringMicro, पपSmall
पजपजज जसफलतत
Micro, पपSmall सफलततककककककपककजज
प जज Enterprises
Empowering &&Medium
Medium Enterprises
12
12
 Way forward
• The credit outstanding from Scheduled Commercial Banks to MSMEs- Rs
10.35 lakh Cr (March 2014), expected to grow to 30 lakh crore in next 5
years.
• 5.77 crore small business units estimated to face a financing short fall of
Rs. 357,000 crore.
• Boosting flow of credit to the sector through the triple mechanisms of
establishment of PMMY targets for the lenders, incentive of refinance
through MUDRA and credit guarantee mechanism proposed to be set up
are volume centric tools
• MUDRA Card at base rate, which is expected to create a south-ward
trend in interest rates.
• The trinity of PMJDY, Aadhar linkage and DBT expected to replace group
lending / peer pressure, using cash and brick and mortar models, with
expected lowering of cost

EmpoweringMicro, पपSmall
पजपजज जसफलतत
Micro, पपSmall सफलततककककककपककजज
प जज Enterprises
Empowering &&Medium
Medium Enterprises
13
 Way forward….contd.
• Mobile driven transaction systems to provide the basis for building of tools
to develop path breaking financial products which ride on ratings derived
from analytics of such transactions.
• MUDRA’s is endeavouring to build an IT platform in partnership with NPCI,
IDRBT, banks, credit-bureaus and other players (which could possibly also
include e-commerce majors as well as telcos).
• MUDRA to provide an advanced micro-loan assessment and accounting
solution for last mile financiers
• All these disruptive measures together with the government’s other efforts
at financial inclusion, Skill development, Digital India, Make in India
expected to give a boost to the economic activity at the lowest level and
help achieve the eradication of poverty at a much quicker pace.

EmpoweringMicro, पपSmall
पजपजज जसफलतत
Micro, पपSmall सफलततककककककपककजज
प जज Enterprises
Empowering &&Medium
Medium Enterprises
14
Thank you!
www.mudra.org.in

EmpoweringMicro,
Empowering Micro,पपSmall
प Small
पपजज &&Medium
प ज जसफलतत
सफलततMedium
ककककपककजज
कक Enterprises
प जज Enterprises
 Progress in Business front
Intrest rates
S No. Institution Interest rate by
Ceiling on interest rate to be charged
MUDRA
by lending institutions to the
ultimate borrowers

1 Commercial 6.72% Not more than base rate of

Banks refinanced banks
2 RRBs/Co- 6.72% Shall not be more than 3.5%
operative above MUDRA’s lending rate
Banks
3 NBFCs Upto SIDBI’s PLR by Shall not be more than 6%
adopting differential above MUDRA’s lending rate
rate of interest
4 NBFC-MFIs Shall be governed by the norms
based on rating
of priority sector lending by
Upto SIDBI’s PLR
banks to MFIs

EmpoweringMicro,
Micro, Small Small &&Medium
Medium Enterprises
Empowering पपपपपजपजज जसफलतत
सफलततककककककपककजज
प जज Enterprises
 Eligibility criteria
Commercial Banks
• Continuous profit track record for 3 years
• Net Non Performing Assets (NPAs) not exceeding
3%
• CRAR < 9%
• Net worth < Rs 100 cr

Regional Rural Banks

 Having profitable operations
 Not carrying any accumulated losses
 Net NPA less than 3% ( can be extended to 5% on
case by case basis)
 Capital to Risk Assets (CRAR) < 9%
EmpoweringMicro,
Micro, Small Small &&Medium
Medium Enterprises
Empowering पपपपपजपजज जसफलतत
सफलततककककककपककजज
प जज Enterprises
 Eligibility criteria (contd..)
NBFCs
 Minimum external rating of BB- for small NBFCs having total portfolio
below Rs. 5 billion and BBB+ for NBFCs having portfolio of Rs. 5 billion or
more.
 Meeting the minimum CRAR and other norms stipulated by RBI and
comply with all the prevailing RBI guidelines. For all categories of NBFCs,
registration with RBI will be mandatory.
 Net NPA should be < 3% and recovery should be > 90%

State Cooperative Banks

Category A
Net NPA up to 5% as on last audited statement.
Should have earned net profit during the last 2 years.
Should not carry any accumulated losses in their books of accounts.
Category B
Net NPA above 5% and up to 10% as on last audited statement.
Should have earned net profit during the last 2 years.
Should not carry any accumulated losses in their books of accounts.

EmpoweringMicro,
Micro, Small Small &&Medium
Medium Enterprises
Empowering पपपपपजपजज जसफलतत
सफलततककककककपककजज
प जज Enterprises
 Eligibility criteria (contd..)
Urban Cooperative Banks
 Should be an Urban Co-operative Bank (UCBs) listed in RBI’s
second schedule.
 should have been in operation for minimum 3 years
 should have earned net profits for the last two years
 sizeable outstanding portfolio in respect of micro/small business
entities engaged in manufacturing, trading and service activities,
Should have Strong financials
i) net worth not less than Rs. 500 million
ii) CRAR not less than 9%
iii) level of net NPA not exceeding 3% and
iv) should not carry any accumulated loss in their books of
accounts.

EmpoweringMicro,
Micro, Small Small &&Medium
Medium Enterprises
Empowering पपपपपजपजज जसफलतत
सफलततककककककपककजज
प जज Enterprises
 Eligibility criteria (contd..)
NBFC-MFIs
Should have been lending to micro units meeting the loan size
criteria of MUDRA for at least 3 years or the promoters /
management should have an experience of at least 10 years.
Having minimum out reach of 3000 existing borrowers.
Minimum rating of Mfr5 by CRISIL or its equivalent
Meeting the minimum CRAR and other norms stipulated by RBI.
Three years profitable track record, Recovery performance not less
than 90%, Portfolio At Risk at 90 days below 5% and operational self
sufficiency > 100%.
Should be a member of credit bureau.
Desirable to have undergone Code of Conduct Assessment (COCA)
with a minimum score of 60 or equivalent.

EmpoweringMicro,
Micro, Small Small &&Medium
Medium Enterprises
Empowering पपपपपजपजज जसफलतत
सफलततककककककपककजज
प जज Enterprises