Pradhan Mantri Mudra Yojana Eligibility Criteria And Other Full Information

Micro Units Development and Refinance Agency Ltd. [MUDRA] is an NBFC supporting development of micro enterprise sector in the country. MUDRA provides refinance support to Banks / MFIs for lending to micro units having loan requirement upto 10 lakh. MUDRA provides refinance to micro business under the Scheme of Pradhan Mantri MUDRA Yojana. 


The other products are for development support to the sector. The bouquet of offerings of MUDRA is depicted below. The offerings are being targeted across the spectrum of beneficiary segments.


Eligibility Criteria:

ELIGIBILITY CRITERIA FOR PARTNER INSTITUTIONS

Micro Units Development and Refinance Agency (MUDRA) has adopted the eligibility
norms in respect of various category of Banks for the partner lending institutions for the purpose
of availing refinance to micro units in manufacturing, trading and service sector in rural and urban


areas.

I. SCHEDULED COMMERCIAL BANKS

A. Public Sector Banks

 Should have earned profit during the last 2 years failing which minimum external rating of
long term instruments not below A-(minus) from accredited credit rating agencies.
 Level of Net NPAs not exceeding 15%.
 CRAR as stipulated by RBI from time to time.
 Net worth above Rs.250 crore.

B. Private Sector Banks

 Should have earned profit during the last 2 years failing which minimum external rating of
long term instruments not below A-(minus) from accredited credit rating agencies.
 Level of Net NPAs not exceeding 10%.
 CRAR as stipulated by RBI from time to time.
 Net worth above Rs.250 crore.

C. Regional Rural Banks

 Should have earned net profit for preceding two years.
 Level of Net NPAs equal to or less than 6%.
 CRAR as stipulated by RBI from time to time.
 Net Owned Fund above Rs.50 crore.


D. Small Finance Banks

 Should have been granted final license by Reserve Bank of India (RBI) for carrying on
Small Finance Bank business and have commenced operations of the Small Finance
Bank.
 SFB/previous entity prior to conversion into SFB (taken together) should have earned
profits during last 2 financial years.
 Should have sizeable outstanding portfolio (> `500 crore) comprising advances to
micro/small enterprises in respect of income generation in manufacturing, services,
trading or activities allied to agriculture /other activities approved/to be approved under
PMMY loans from time to time.
 Should have strong fundamentals based on last audited balance sheet .
 CRAR as stipulated by RBI from time to time.
 Net worth greater than or equal to 100 crore.
 Gross NPA less than or equal to 5%.

II. MICRO FINANCE INSTITUTIONS

 Should be a registered legal entity lending to micro units meeting the loan size criteria
of MUDRA (which is presently loan size of Rs.1 lakh or as stipulated by RBI from time
to time) for atleast 3 years or the promoters /management should have an experience
of atleast 10 years.
 Having a minimum outreach of 3000 existing borrowers.
 Should have received minimum capacity assessment rating as indicated below :
Mfr-4 (equivalent to CRISIL) for TN, Kerala, Karnataka andPuducherry
Mfr-4 (equivalent to CRISIL) for Tier-I and Tier-II MFIs and Mfr-5 for the Tier-III
MFIs in other remaining states.
 Should have suitable systems, processes and procedures such as internal accounting,
risk management, internal audit, MIS, cash management etc.
 Should target own account enterprises within micro units category i.e. business run by
the owner.
 Meeting the minimum CRAR and other norms stipulated by RBI for MFIs registered as
NBFC-MFIs and comply all the prevailing RBI guidelines, including pricing etc.
 Three years profitable track record, Recovery performance not less than 90%,
Portfolio at Risk > 90 days below 5% (relaxable upto 7% on case to case basis) for
MFIs.

 Should be a member of credit bureaus as per RBI policy.
 Has a minimum term loan/refinance requirement of Rs.0.50 crore.
 Targets the poor, especially women and is secular.
 Has audited financial statements (in case of NGO with microfinance as a programme,
the NGO should have separate audited financial statements for the MFI programme)
and
 For NBFCs or any other MFI set up for/by taking over the existing MF operations of
another entity, track record of the earlier entity can be considered for existence, past
ratings etc., guidelines relating to value of FDRs to be placed as security etc. subject
to continuity of promoters/senior management/transfer of major (> 60%) part of the MF
operations of the earlier entity.
 MUDRA’s loan to be on lent by MFIs for use by borrowers in; setting up/running nonfarm income generating activities and micro/small enterprises including trading


activities/services.

III. NON BANKING FINANCE COMPANIES (NBFCs)

A. Larger NBFCs i.e. Assets size > Rs.500 crore

 The NBFC should be registered with RBI as Asset Finance Company (AFC) or
Loan Company. In respect of NBFC-Loan Company, a CA certificate that if the loan
is given for income generating activities, 60% of the income comes from productive
assets should be furnished. Two Tier NBFCs extending loan / resource support to
MFIs (both NBFC-MFIs and non-NBFC MFIs complying with RBI norms for NBFCMFIs or priority sector status) for on lending to ultimate borrowers would also be
considered
 NBFC should have been in business for 5 years and should have earned Net Profit
for last 3 years. In case of the NBFCs financing second hand vehicles, the NBFC
needs to have experience of 3 years in the activity and also have recorded profit
during the period.
 Minimum Net Owned Fund of Rs.20 crore and Minimum Asset size of Rs.500 crore.
 CRAR-Minimum 15%.
 Minimum Gross NPA & Net NPA would be based on rating of agency.
 External rating range of BBB+ and above.

B. SMALLER NBFCs i.e. Asset size less than Rs.500 crore

 The NBFC should be registered with RBI as Asset Finance Company (AFC) or Loan
Company. In respect of NBFC-Loan Company, a CA certificate that if the loan is given
for income generating activities, 60% of the income comes from productive assets
should be furnished. Two Tier NBFCs extending loan / resource support to MFIs (both
NBFC-MFIs and non-NBFC MFIs complying with RBI norms for NBFC-MFIs or priority
sector status) for on lending to ultimate borrowers would also be considered
 Should have been in business for 5 years and earned Net profit for last 3 years. In
case of the NBFCs financing second hand vehicles, the NBFC needs to have
experience of 3 years in the activity and also have recorded profit during the period.
Preference may be given to NBFCs enjoying well conducted credit facilities from
Scheduled Commercial Banks.
 Minimum Net Owned Fund of Rs.15 crore and Minimum Asset size of Rs.25 crore.
 The NBFC normally has done lending business of at least Rs.20 crore during the
immediately preceding financial year.
 CRAR-Minimum 15%.
 Minimum Gross NPA & Net NPA would be based on rating of agency.
 External rating range of BB- and above. 

Fiscal Incentives:

To signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth to look forward to, MUDRA offers incentives through these interventions:

> Shishu : covering loans upto  50,000/-

> Kishor : covering loans above  50,000/- and upto  5 lakh

> Tarun : covering loans above  5 lakh and upto  10 lakh

Generally, loans upto  10 lakh issued by banks under Micro Small Enterprises is given without collaterals.


Objective Of The Scheme:

Mudra loan is extended for a variety of purposes which provide income generation and employment creation. The loans are extended mainly for :                                                                   
  • Business loan for Vendors, Traders, Shopkeepers and other Service Sector activities                                                                                                                                                                            
  • Working capital loan through MUDRA Cards                                                                                                                                                                 
  • Equipment Finance for Micro Units                                                                                                  
  • Transport Vehicle loans

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