What is Mudra bank and what are its Functions?

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Prime Minister Narendra Modi will launch MUDRA bank or the Micro Units Development and Refinance Agency Ltd. bank in Delhi on Wednesday.

Here's your 10-point cheatsheet to this story.

1) The bank will be an agency to refinance micro-finance institutions and will also act as regulator for the sector.

2) Finance Minister Arun Jaitley in his first full-year Budget in February had proposed the creation of MUDRA bank with a corpus of Rs 20,000 crore and credit guarantee corpus of Rs 3,000 crore.

3) MUDRA bank is expected to benefit about 5.77 crore small business units.

4) Among others, the bank will benefit small manufacturing units, shopkeepers, fruit and vegetable sellers, beauty parlour owners, truck operators, hawkers, artisans in rural and urban areas with financing requirements up to Rs 10 lakh.

5) MUDRA bank will be responsible for regulating and refinancing all micro-finance institutions (MFIs) which are in the business of lending to micro or small business entities engaged in manufacturing, trading and services activities.

6) MUDRA bank 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.

7) "The initial products and schemes under this umbrella have already been created and the interventions have been named 'Shishu', 'Kishor' and 'Tarun' to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur," the Finance Ministry said.

8) 'Shishu' would cover loans up to Rs 50,000 while 'Kishor' above Rs 50,000 and up to Rs 5 lakh. 'Tarun' category will cover loans of above Rs 5 lakh and upto Rs 10 lakh.

9) 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.

10) Banks, particularly dominant state lenders who are already under pressure over bad loans, have largely held back from lending to a sector where debt repayment installments can often be less than the cost of pursuing the payment.