11 things you must know about Mudra Bank

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Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a public sector financial institution in India. It provides loans at low rates to microfinance institutions and non-banking financial institutions which then provide credit to MSME's.. It was launched by Prime Minister Narendra Modi on 8 April 2015.

The roles envisaged for MUDRA include laying down policy guidelines for micro enterprise financing business and registration of MFI entities as well as their accreditation and rating.

Here are 11 things you must know about Mudra Bank and how it will benefit you:

What does it stand for?
Mudra Bank stands for Micro Units Development Refinance Agency (MUDRA). Also, Mudra, in Hindi, means currency.

Setting up
Mudra Bank was set up through a statutory enactment and is responsible for developing and refinancing through a Pradhan Mantri MUDRA Yojana.

Last mile financiers
Since small entrepreneurs and businesses are often cut off from banking system because of limited branch presence, Mudra Bank will partner with local coordinators and provide finance to "Last Mile Financiers" of small/micro businesses.

Targets
The Finance Ministry said measures to be taken up by MUDRA are targeted towards mainstreaming young, educated or skilled workers and entrepreneurs including women entrepreneurs.

Small Businesses
The bank will cater to 5.77 crore small business units that are spread all across India who currently find it difficult to access credit from the regular banking system.

Recovery method
Mudra Bank will ensure clients are properly protected and will lay down principles and methods of loan recovery in case of a default. The Bank will also rigidly follow "responsible financing practices" so deter borrowers from indebtedness.

Corpus
The Bank will be set up with a corpus of Rs 20,000 crore and a credit guarantee fund of Rs 3,000 crore.

Shishu/Kishor/Tarun
The Bank will nurture small businesses through different stages of growth and development of businesses termed as Shishu, Kishor and Tarun.

Kishor
In this stage, the entrepreneur will be eligible for a loan ranging from Rs 50,000 to Rs 5 lakhs.

Tarun
This last and final category will provide loans for up to Rs 10 lakhs.