Given that six out of every 100 small businesses across the country are run by people belonging to SC, ST or Backward Communities (BCs), Budget 2015 announced an unexpected sop for them. It set up a dedicated refinance agency for the community; it called it Mudra Bank.
The proposed bank, a first-of-its-kind, will assist those at the ‘bottom-of-the-pyramid’ who lack access to funding, with an initial corpus of `20,000 crore. It will provide credit facilities to all SC/ST businesses.
“I propose to create a micro units development refinance agency, Mudra Bank with a corpus of `20,000 crore and a credit guarantee corpus of `3,000 crore,” said Arun Jaitley, Minister of Finance, in his speech on Saturday morning. There are 5.77 crore small manufaturing and training business units run by individuals in the country and as per estimates, 62 per cent of them are owned by SC, ST and other BCs.
“These measures will greatly increase the confidence of our young educated and skilled workers who are able to become the first generation enterprises and existing small businesses will be able to expand their activities....Just as are banking the unbanked, we are funding the unfunded,” Jaitley said. The Bank will refinance institutions through the Pradhan Mantri Mudra Yojana. The lending priority will be given to SC/ST enterprises.
According to the minister, development has to generate inclusive growth, and while large corporate and business entities have a role to play, growth has to be complemented by the informal sector, that is enterprises that generate maximum employment.