Question:Consider the following statements regarding Pradhan Mantri MUDRA Yojana:
(1) It’s objective is to refinance collateral-free loans given by the lenders to small borrowers.
(2) It has a feature of a Mudra Card which permits access to Working Capital through ATMs and Card Machines.
Which is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of these
Answer:(c)Context:
- Union Cabinet approved a scheme for interest subvention of 2% for a period of 12 months, to all Shishu loan accounts under Pradhan Mantri Mudra Yojana (PMMY) to eligible borrowers.
Background
- Under PMMY, loans for income generating activities up to Rs. 50,000 are termed as Shishu loans.
- PMMY loans are extended by Member Lending Institutions viz. Scheduled Commercial Banks, Non-Banking Finance Companies and Micro Financial Institutions, registered with Mudra Ltd.
Eligibility:
- The scheme will be extended to loans which meet the following criteria – outstanding as on 31stMarch, 2020; and not in Non-Performing Asset (NPA) category, as per Reserve Bank of India (RBI) guidelines, on 31st March 2020 and during the period of operation of the Scheme.
- The interest subvention would be payable for the months in which the accounts are not in NPA category including for the months that the account becomes a performing asset again, after turning NPA.
Implementation:
- The Scheme will be implemented through the Small Industries Development Bank of India (SIDBI) and will be in operation for 12 months.
Significance:
- The Scheme has been formulated as a specific response to an unprecedented situation and aims to alleviate financial stress for borrowers at the ‘bottom of the pyramid’ by reducing their cost of credit.
- It will incentivize people who will make regular repayments of loans.
PMMY scheme:
- Launched in April, 2015. The scheme’s objective is to refinance collateral-free loans given by the lenders to small borrowers. Mudra’s unique features include a Mudra Card which permits access to Working Capital through ATMs and Card Machines.
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