New Delhi: Finance Minister Arun Jaitley has set a target of Rs 1.22 lakh crore for loans to be given by state-run banks to promote new entrepreneurs under the Pradhan Mantri Mudra Yojana (PMMY) which will seek to “fund the unfunded.”
Making a pitch for promoting entrepreneurship, the minister on Friday said that earlier there was no institutional mechanism to fund this unfunded segment and access to credit came at a high cost. Through this scheme, grassroots entrepreneurs will get cheaper credit based on their business activity, he said.
There is need to promote entrepreneurship because jobs in both public and private sectors are limited, the minister said.
“Large industries offer only two crore jobs and they have their own challenges such as slowdown in the global economy,” Jaitley said.
The minister said about 5.77 crore small business units generate almost 11 crore jobs.
So far, state-run banks have given loans to 37 lakh people totalling Rs 24,000 crore, he said.
Jaitley said some borrowers in large industries are not able to repay loans and seek more time due to external factors such as economic slowdown. But financial institutions have experienced that 99 per cent small borrowers repay on time, he said. State-run banks kick-started mega credit campaigns across the country on Friday to give a push to Pradhan Mantri Mudra Yojana.
The campaigns, which will run till October 2, aim to not only generate greater credit to micro enterprises but also create a sound ecosystem subsequently for bank credit to aspiring entrepreneurs, especially small and micro entrepreneurs.
Mudra Ltd has been established as a subsidiary of SIDBI, with an initial corpus of Rs 5,000 crore to provide refinance to all banks seeking refinancing of small business loans under Pradhan Mantri Mudra Yojana.