MUDRA or Micro Units Development and Refinance Agency Ltd is a government created development and finance agency aimed to give refinancing and several development functions to micro unit enterprises. Its primary responsibility is to provide funding to nearly 5.8 crore Non-Corporate Small Business Sector (NCSB) units of the country through various Last Mile Financial Institutions like Banks, NBFCs and MFIs. The micro enterprises or Non-Corporate Small Business sector (NCSB) are disadvantaged and disaggregated tiny entities that influences the lives of around fifty crore people. Their growth performances bring momentum in economic growth.
Relationship between MUDRA and SIDBI
SIDBI is a development financial institution with multiple functions for the MSMEs (Micro, Small and Medium Enterprises) including financing and development responsibilities. It was established in 1990 it has become the principal financial institution for the promotion, financing and development of MSMEs. SIDBI gives refinancing as well as direct financing support to firms. Previously, it was the SIBDI that provided indirect loans to small units. The MUDRA aims to give loans below Rs 10 lakh. Micro units are the domain of MUDRA. Under the existing arrangement, SIDBI gives loans for higher amounts. Hence, MUDRA is established as a subsidiary of SIDBI.