A new Mudra for startersBehind all budding start-ups is the assurance of financial capital, via a loan. Mudra is doing just that.

Mudra was set up with a corpus of Rs 20,000 crore and a credit guarantee corpus of Rs 3,000 crore. Exactly after a year of the Mudra yojana by the Prime Minister was announced we get a rundown from the CEO on how far it has been able to fund the micro entrepreneurs and what difference it is making in the financial services sector. Jiji Mammen, CEO, Mudra Bank, unveils all this and more in an exclusive chat with Entrepreneur.

How is Mudra Bank supporting start-ups?

Start-up is not an initiative of Mudra Bank as such; it's an initiative of the government where it is supporting the start-up ventures through various means like funding, which is being coordinated by SIDBI. Mudra loans are also supporting the startups. It's the smaller ones, the micro ones. So anybody starting a new venture, can take a loan from mudra. The loan is available up to Rs 10 lakh. Financing (50 percent) has been there for existing entrepreneurs and 50 percent for new startups.

How has the first year been for Mudra?

Mudra was started in April 2015. If you see the first year performance, we have two things. Mudra basically is a repayment service. We provide repayment for different funding institutions. That could be banks, NBFC and MFIs; so
agencies financing individuals are being refinanced by us. That is the role of the bank. If you look at mudra refinance this
year it has been Rs 2,500 crore. It is the ground level credit which has taken place, which is without availing mudra refinance there is a large lending taking place. There is a scheme of the government called Pradhan Mantri Munda Yojana under this around Rs 1,35,000 crore has been sanctioned for Mudra loans during the last one year. Refinance support comes to us. And we are growing up. We are only providing a supplementary role. All loans are covered under the credit guarantee of mudra. So loans that are given by the bank are given as support given under the credit guarantee scheme.

Tell us about Mudra card.

We have come out with something called mudra card. It's a debit card. If somebody has got a loan sanctioned against this a debit card is issued and this debit card is used for drawing the money as and when they require. As and when they have fund and supplement money they can pay back. This is very much useful for traders and vendors. They can really benefit from this kind of a mudra card. They can draw the money and then use it and if they have money in the evening they can repay it.

What is the repayment period?

Repayment depends on the activity and the cash flow. It varies from 2 to 5 years. For working capital, it is not more than a year.

What is the number of borrowers who have benefitted?

Around 3.3 crore borrowers have been financed under this mudra yojana for Rs 1 lakh. Around 75 percent has been
women because it's through MFIs which mostly caters to women.

(Article first appeared in Indian edition of Entrepreneur magazine, may 2016 edition)